Working Instead of Retiring: How Delaying Retirement Pays Off
“Don’t leave it to chance: A step-by-step guide to early retirement in Switzerland.”
Retirement expert
published on
18. March 2026
Key Points at a Glance
A growing proportion of the Swiss population is choosing to remain in the workforce beyond the standard retirement age. While the focus used to be on early retirement, current trends show that one in four women and one in three men remain professionally active beyond the ages of 64 and 65, respectively. Sound retirement planning is crucial to fully capitalize on the financial benefits of this decision and avoid unnecessary tax burdens.
Motivation for working in old age
In Switzerland, staying in the workforce is often not driven by financial necessity. Many seniors feel fit, appreciate the daily recognition, and find joy in their work, which is why they often simply reduce their workload rather than stopping entirely. This trend is also beneficial for companies, as experienced professionals are in high demand. Many SMEs therefore offer targeted programs to retain employees longer, for example for projects or in reduced-hour positions.
Financial implications of delayed retirement
Working longer can significantly increase the monthly pension available. Compared to retiring at age 65, a two-year deferral can noticeably increase net income in retirement.
Benefits under the AHV
The AHV pension can be deferred for up to five years—that is, until age 70. Such a deferral results in a lifetime pension supplement of up to 31.5 percent. Since the current AHV reform, it is also possible to flexibly choose to defer a portion of the pension (between 20 and 80 percent). Another advantage of the new regulation is that contributions paid after reaching the reference age can increase the pension, provided the maximum pension has not yet been reached.
Optimizing the Pension Fund
Those who remain employed can generally continue to make contributions to their pension fund. This not only leads to a higher retirement savings balance through additional savings contributions and interest, but often also to a higher conversion rate. According to model calculations, a five-year deferral can increase the annual retirement pension from the pension fund by over 30 percent. If the respective pension fund does not allow for pension deferral, a partial withdrawal as a lump sum may be advisable to reduce taxable income.
Potential of Pillar 3a
Working individuals may defer withdrawals from Pillar 3a until the age of 70 and continue to make contributions. This offers significant tax advantages, as contributions can be deducted from taxable income. In the year of one’s 65th birthday, under certain conditions, there is even the possibility of a double contribution: first, the standard maximum amount up to the birthday, and additionally an income-dependent contribution for the remaining months.
The Tax Component of Retirement Planning
Without precise coordination of wages and pension payments, a high tax burden looms. If earned income and pension payments flow simultaneously, this can result in a significant portion of the AHV pension—in some cases over 40 percent—being directly consumed by taxes.
As part of professional retirement planning, the following points should therefore be examined:
- Pension deferral: Is it possible to forgo the pension for the time being to save on taxes and receive a higher pension later?
- Pension fund contributions: Voluntary contributions can also reduce taxes in old age, provided that a lump-sum withdrawal is not planned within the next three years.
- Vested benefits: A delayed withdrawal of vested benefits can be tax-advantageous, as the balance does not have to be taxed as assets until it is paid out.
Conclusion: Early planning ensures financial security
Working after retirement is most worthwhile when the financial strategy behind it is sound. The complexity of the rules governing the AHV, pension funds, and taxation makes an individualized analysis essential. Those who address their retirement planning early on improve their long-term income and protect themselves from unnecessarily high taxes.
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Frequently Asked Questions
What are the benefits of deferring your AHV pension?
If you continue working past the reference age and do not claim your AHV pension immediately, you can defer it for up to five years—that is, until you reach the age of 70 at the latest. This deferral is rewarded with a lifetime pension supplement of up to 31.5 percent. Since the most recent reform, it has also been possible to flexibly choose to defer a portion of the pension between 20 and 80 percent. In addition, AHV contributions paid after reaching the reference age can increase your future pension, provided the maximum amount has not yet been reached.
Can I continue to make contributions to Pillar 3a after turning 65?
Yes, provided you remain employed, you may defer drawing your Pillar 3a benefits until age 70 and continue to make contributions during this time. These contributions are deductible from taxable income, which reduces your tax burden. There is a special provision for the year of your 65th birthday: Provided certain deadlines and conditions are met, you may even make two contributions—the regular maximum amount before your birthday, plus a percentage of your net income for the remaining months of the year.
How does continuing to work affect my pension fund benefits?
Those who work longer generally benefit from a higher retirement balance in the pension fund, as savings contributions continue to be made and the capital earns interest. Additionally, at many pension funds, the conversion rate increases with each additional year of work, which significantly raises the annual pension. If your pension fund does not offer a pension deferral, it may make fiscal sense to withdraw part of the balance as a lump sum to reduce your taxable income.
Why is coordinating salary and pension so important from a tax perspective?
Without careful coordination, there is a risk of a disproportionately high tax burden, as earned income and pension payments are added together. In extreme cases, this can result in more than 40 percent of the AHV pension being eroded by taxes. Early retirement planning helps you utilize tools such as pension deferral or staggered lump-sum withdrawals to mitigate tax progression and optimize your disposable income after taxes.
For canton-specific details and concrete calculations regarding Pillar 3a, we recommend seeking individual advice from a specialist.