Early retirement in Switzerland: age, cost and funding

At what age can you take early retirement?

The AVS (1st pillar) can be drawn one or two years before the reference age, i.e. from age 63. The AVS 21 reform made this more flexible, including on a partial basis.

The 2nd pillar (LPP) can generally be drawn earlier — often from age 58 or 60 — depending on your pension fund's rules. You can therefore combine an early LPP withdrawal with an AVS that starts later.

How much does early retirement cost?

Taking retirement early costs on two fronts. The AVS pension is reduced for life for each year of early withdrawal (the reduction depends on the rates in force). The LPP pension also falls: you contribute for less time, your capital is smaller, and the conversion rate applied is often lower for an early departure.

On top of this comes the cost of the 'empty' years: between your departure and the start of the AVS, you must live off your savings. In total, two or three years of early retirement can reduce your retirement income significantly — hence the importance of doing the numbers precisely.

Drawing early or deferring: the exact rates

Drawing the AVS pension early reduces it permanently, for the whole of retirement: 6.8% per year of early withdrawal. Deferring it does the opposite, raising it for good, by 5.2% for one year up to 31.5% for five.

The table applies those rates to the maximum pension of CHF 2,520 a month. Since AVS 21, early withdrawal is possible from 63 (from 62 for women in the 1961-1969 transition generation, at more favourable rates), and you can draw or defer only part of the pension, between 20% and 80%.

How to fund the years before the AVS?

Several sources can bridge the period before the AVS is paid: a lump-sum withdrawal from the 2nd pillar, your 3rd-pillar (3a) savings, your free assets, or a 'bridging pension' offered by some employers.

The order in which you draw on these sources has a tax impact. Staggering lump-sum withdrawals over several years can reduce the total tax — something the RetirePlan tool optimises for you.

Do you have to keep paying AVS contributions?

Yes — and this is often forgotten. If you stop working before the reference age, you remain liable to pay AVS contributions as a person without gainful activity. Otherwise, you create contribution gaps that further reduce your future AVS pension.

The amount of these contributions depends on your wealth and income. It is an additional cost to factor into the budget of an early retirement.

Putting numbers on your early retirement

The only way to decide is to compare several retirement ages on your real situation: income, the cost of the years to fund, the reduction in pensions and taxation. RetirePlan calculates the impact of each retirement age and tells you whether your plan stays sustainable.

You then see, in numbers, at what age you can really afford to retire — and what you would need to save to retire earlier.

Frequently asked questions

At what age can you take early retirement in Switzerland?

The AVS can be drawn one or two years early, i.e. from age 63. The 2nd pillar (LPP) can often be drawn earlier, from age 58 or 60 depending on your pension fund's rules.

How much does early retirement cost?

Taking retirement early reduces your AVS and LPP pensions for life, and you must fund the years without a pension from your savings. Depending on the number of years, the impact on your retirement income can be significant — a personalised calculation is essential.

How do you fund the years before the AVS?

With a lump-sum withdrawal from the 2nd pillar, your 3rd pillar (3a), your free assets, or an employer bridging pension. The order and staggering of withdrawals strongly affect the tax.

Do you have to keep paying AVS contributions after early retirement?

Yes. If you stop all gainful activity before the reference age, you must continue paying AVS contributions as a person without gainful activity, otherwise you create gaps that reduce your future pension.