Saving efficiently for retirement by managing
and coordinating across countries
Working in different countries allows you to build wealth and social security credits in multiple systems. Although this is a good thing, understanding how to best navigate the opportunities provided by several countries rules can be challenging.
The US and Swiss systems have differences and similarities. Both countries rely on three pillars: Pillar I or social security, Pillar II or employer-sponsored retirement accounts and Pillar III or individual retirement accounts. Two tax treaties, a Totalization Agreement for social security taxes and the Income Tax Convention for income taxes, help maximize benefits and avoid double taxation in both the accumulation and distribution stage.
Wealth can also be built beyond the three pillars, in taxable investment accounts, real estate and business investments and other income generating assets.
But of course, retirement planning is not just about building and spending assets after a traditional professional career. Planning can take many forms: changing careers or taking a career break, starting a new business, switching to part-time work, taking a sabbatical….there are infinite possibilities. We can help you make the best use of your resources to allow you to become financially independent and live your life intentionally in alignment with your values.
- Understand the differences and similarities between the US social security system and the Swiss AVS/AHV Pillar I system.
- Understand how the US-Swiss Totalization Agreement works, and the benefits available to you if you have made contributions in both countries.
- Plan your US and Swiss social security claiming strategies to ensure you receive the highest level of benefits available to you individually, or to you and your spouse.
- Understand the Windfall Elimination Provision and estimate its impact on your US social security benefits.
- Understand Swiss Pillar 2 occupational pensions and their difference with vested benefits accounts such as LPP and Freizügigkeitskonto.
- Properly report your Pillar 2 account balances and contributions and keep track of their cost basis.
- Understand the US tax consequences of rolling over a Pillar 2 to a new employer when changing jobs, or to a vested benefits account when you have a gap in Swiss employment.
- Understand the US tax consequences of making Pillar 2 buy-backs and help you evaluate if a buy-back makes sense for you.
- Understand your 401K, 403(b) or other employer sponsored deferred benefit plans, and the investment choices offered by your US employer.
- Understand the similarities and differences of Swiss Pillar 3 accounts and US IRAs, the US implications of Pillar 3 investment choices, and the Swiss tax treatment of IRAs, including Roth IRAs.
- Build a retirement plan that takes into consideration your values, priorities and goals, and makes the best use of all your wealth assets.
- Put together a cost and tax efficient withdrawal strategy to support your lifestyle during your work-optional years.
- Project your retirement cashflows, monitor your retirement plan progress and stress test your plan regularly to help you stay on track.
- Plan for the unexpected so that, no matter what the future brings, you have clarity in your financial picture and in your options going forward.
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We believe that every person deserves access to quality financial education that can empower them to make good financial decisions. For individuals and families who are unable to retain our professional services, our public benefit initiatives support free financial education through the Crossborder Planner [free newsletter and blog], and the Crossborder Academy [free webinars], covering topics like tax reporting, tax planning, saving for retirement, benefiting charities or caring for the next generation.