Written by Lukas Bachmann
Investing in the Retirement Phase
With retirement, not only your income changes but often also your asset structure. If you choose a capital withdrawal from the pension fund or withdraw multiple pillar 3a accounts, you suddenly face a new situation: a large sum of money sits in your account – and the question is open as to how to handle it.
While the money is in the pension fund or pillar 3a, much is regulated. The investment strategy is predetermined, fluctuations are barely noticed and decisions do not have to be actively made. With the withdrawal, this changes abruptly. The capital becomes visible, available and thus emotionally tangible.
All too often, it then sits in the account for months or years. Out of caution. Or because it is unclear what would be "right." Yet this phase is precisely the decisive one. Because from this point on, the capital bears the responsibility of securing a significant part of your livelihood.
Why Doing Nothing Is Also a Risk
A high bank balance initially conveys security. The money is available, visible and subject to no price fluctuations. In real terms, however, it is constantly losing value. Inflation also affects you in retirement – often even more strongly because a large part of your expenses is fixed or only limitedly adjustable.
A look at the development of consumer prices in Switzerland in recent years shows how quickly purchasing power is lost. Even in a comparatively stable environment like Switzerland, prices have risen noticeably since 2021. This effect is not spectacular, but constant. And therein lies the danger: the loss of value occurs gradually and is often underestimated in everyday life.
Anyone who withdraws capital from the pension fund or pillar 3a and leaves it in an account for a long period assumes that purchasing power remains stable. This assumption is deceptive. Every franc in the account may nominally feel the same, but in real terms, less and less can be financed with it year after year.
Structuring Assets in Retirement: A Framework
The goal of investing in retirement is not maximum returns, but a reliable combination of liquidity, return and security – tailored to your personal time horizon.
Differentiate between three pots:
1. Short-term liquidity (0–3 years)
This portion covers your regular expenses for the next 2–3 years. It stays in cash or very safe short-term investments. No market risk. Purpose: you do not have to sell investments at an unfavorable time to pay your bills.
2. Medium-term provision (3–10 years)
This portion is invested in conservative mixed funds or bonds with a slight equity component. The goal is to achieve a modest real return – enough to at least compensate for inflation.
3. Long-term accumulation (10+ years)
This portion is invested broadly in equities or equity ETFs. It is intended to continue growing in the long term and serve as a reserve for the later phase of retirement. Here, fluctuations are accepted because the time horizon allows for recovery.
The advantage of this three-pot strategy: You avoid the fatal sequence-of-returns risk – having to sell assets in a down market because you need liquidity. The short-term pot acts as a buffer so that the long-term pot can recover from market downturns undisturbed.
What Changes with Investment Strategy in Retirement?
Before retirement: Regular savings contributions balance out market fluctuations. Buying low is automated.
In retirement: Withdrawals replace deposits. If you have to withdraw capital when prices are low, you permanently destroy substance. This is called sequence risk.
Countermeasure: The three-pot model described above. Plus a withdrawal strategy that is adjusted annually rather than monthly or quarterly. This gives the portfolio time to recover between withdrawals.
Conclusion
Investing in retirement is not speculating. It is the conscious decision to protect your purchasing power instead of entrusting it to an account that loses value year after year. A structured approach with clear pots, defined time horizons and a solid withdrawal strategy has nothing to do with gambling – it is the responsible management of the capital you have built up over a lifetime.
Do not know where to start with your pension fund or pillar 3a capital? In our retirement planning, we develop a strategy that fits your personal situation and life goals – independent, clear, implementable.