27 Mai. 2021

Well I have a birthday coming up soon, and has got me thinking about retirement. Julie and I were reading an article in the paper last week about saving for retirement. The article was gushing about the fact that here in Switzerland a 50 year old needs to be saving 14% of your salary to be able to retire comfortably. The article then went on to compare other countries in Europe and the United States.

Italy 28 percent

Germany 30 percent

United States 42 percent

France 44 percent

This has really been bothering Julie and I. Over the 30 plus years of working we have been able to save a pretty good nest egg, but we have been saving NO WHERE near 42% of our salaries. I was finally able to track down the study, it was very mis leading. Basically they are assuming that the mythical 50 year old in their study will work for another 17 years, and has not saved a penny to this point. That makes a HUGE difference. If you start saving for retirement from your first paycheck, it makes a huge difference in what percentage of your paycheck you need to save when you are older. I admit, I do not know much about the Swiss retirement system, but I wonder how close to a current lifestyle you would be able to live, if you only saved 14% of your salary for the last 17 years of work? Especially here, where it is pretty darn expensive!!

I did learn more about the Swiss retirement system I found it pretty interesting. There are three pillars that make up the system.

Pillar 1: This is most similar to what in the US we would call Social Security. The difference being, that it is paid 100% by the employee. Where in the US it is a combined contribution. From what I can tell, the amount taken out of your paycheck is pretty fixed. This contribution results in a maximum payment of around 26,000 CHF per year.

Pillar 2: This would be similar to a 401K in the US. It is paid for by a combination of employer and employee contributions. This is a MANDATORY contribution for every employee making over 20,000 CHF per year. From what I can tell, the law calls for a 50/50 split between employee and employer, but many employers fund more than the required minimum. This part is kind of strange for Julie and I. We will wind up getting a portion of this back in a lump sum when we move back to the US. It helps us a little, because the Swiss tax on this will be lower than the income tax, but of Course Uncle SAM is going to get their cut, so as US citizens we get screwed. We paid US tax on it before we contributed, and then we will get taxed on it again as income when it is paid out. :(. Side note: The US is one of only two countries that require their citizens to pay income tax when they live in another country. I’ve also learned that we are fed a big line of BS when we are told that taxes are so much lower in the US than other countries.

Pillar 3: This is a really good deal, though it is all optional, and funded 100% by the employee. What makes it a good deal is that money invested here is given a tax deduction when you contribute, and it is tax free when you go to withdrawal it. Assuming you have met the time and age requirements. So for a really young person, this by far the best way to save for retirement. The tax advantages, are to me, very hard to believe, but that is because I am blinded by the US, where one way or another we paying tax on the money. I do think it makes a lot of sense to encourage investments for retirement to give you a break on the taxes. That is a lot of encouragement to plan.

COVID updates

Well, earlier this week the Government announced some more changes to the COVID protocols. Starting 31 Mai, restaurants can open up for indoor dining again. We still have to wear masks when moving around the restaurant. Other than immediate family, there can be no more than 4 people at a table. The homeoffice rule, becomes a recommendation instead of a requirement. There is one big catch to the recommendation, however. A company that wants to have their office employees back at work MUST develop a testing protocol where every employee is tested at least once per week. What I cannot find anywhere is who pays for the testing? What I found even more silly about the testing requirement is that the government gives us free one test per week, but they will not count that test for a company testing protocol. So we do not know if Julie will be working from home next week, or not. Her company is having a big meeting on Friday, where they are supposedly going to explain the rules. It should be interesting.

Other restriction news: If you are vaccinated, and you travel abroad will be exempted from testing and from quarantine upon their return. That is actually a kind of big deal, because the COVID test is 120 CHF for travel purposes, and your insurance will not cover it. Still no news as to lifting the border restrictions from the America’s, but we think it will be sometime mid – late June. There were some changes in regards to event size. The way I am reading the rules is 100 people can meet inside and 300 outside, but then there is a sentence in the release that says up to 50% of the capacity. So I think they are saying that if the seating of the venue is 500, then you can have 250 people in attendance? It doesn’t make any sense to me, but honestly, we don’t often go to places inside; so I may never know! Not even 20% of the population has been fully vaccinated, but the government is still insisting that everyone who wants a vaccination will be vaccinated by July.

The really good news is that the virus is on a pretty significant improvement trend. Of course we were that same way a year ago, and look what happened, then. I think the vaccines will make a big difference, though, and we will not have the same problems we had in the fall. This week the number of new cases dropped below 1000 per day for the first time since October. The hospitals are well under capacity. One thing I have not seen mentioned anywhere is when the mask requirements for transportation will lighten up. I keep thinking they address it when the COVID passport is rolled out, but who knows. All we can do is wait and wee what happens.

Switzerland and the EU

In other big news this week. The Belarus Government is trying to use Switzerland as part of their justification for hijacking the flight this week. The Belarus Government has announced that Switzerland alerted them that there was a bomb on the flight; which meant they could legally divert the flight to arrest the dissident. The Swiss government is not playing ball, and has been pretty adamant that no one from Switzerland called them about a bomb.

Switzerland broke off talks with the EU this week. The talks were trying to set up some treaty agreements to modernize treaties that were written almost 20 years ago. The talks have been going no where fast. The two parties started talking about the issues 13 years ago, and have not been able to come to any agreements. Basically it boils down to movement of people. THE EU has free movement across borders including setting up residency in other countries. This was one of the big motivations to Brexit, and the Swiss are every bit as worried about foreign people moving here as the Brits are. This one is going to be very interesting to me. In a lot of ways, the UK market is much bigger and more important than the Swiss markets, but it is the UK struggling not the EU after Brexit took place. I think Switzerland will quickly find that the EU is more important to them, than Switzerland is to the EU.

I freely admit I do not understand all that is going on between the EU and Switzerland. I do think Switzerland is fighting way outside their weight class, though. The Swiss have every right to set their own immigration policies, and even though they have implemented these policies very much in favor of the EU, they should not have to change them any more unless they want. On the flip side the EU has every right to play hardball and make it more difficult for the Swiss to do business with the EU. I am enjoying following this story. In the long run, I think what happens, is that both groups simply continue to live with the agreements that were signed. Neither side wins, and neither side loses. I know I have not been here that long, and have a lot to learn, but I just don’t see the Swiss giving up any more of their independence to the EU.

I hope you have a great week. Talk to you soon.