Retirement - The mountain is calling: what pensioners need to know before moving to Switzerland
Breathtaking mountain landscapes, azure blue lakes, picturesque sceneries: The beautiful nature of Switzerland is attracting more and more German pensioners who want to spend their retirement there. According to a report by the German Pension Insurance, there were 27,663 pension payments from Germany to retirees in Switzerland last year. After Austria, Switzerland is the second most popular retirement destination for German senior citizens.
Another reason is obvious: Almost two-thirds of the Swiss population speak German. Therefore, the language barrier – despite the differences in dialect – should be overcome with some good will in most cases. The high standard of living also attracts many, as well as the security: according to the Global Peace Index, Switzerland is the sixth safest country in the world. The cities are considered clean and the healthcare is very good with quickly available doctor appointments. In addition, it is never too far to the German border – for retirees who want to visit their children and grandchildren in the homeland from time to time, this is an advantage.
German Pensioners Need Financial Cushions
However, emigrating to the Alpine Republic has a big catch: Switzerland is the second most expensive country in the world, according to the OECD Price Level Index. According to the Swiss Federal Statistical Office, those living in Switzerland are considered poor if their income as a single person is below 2284 Swiss francs per month, which is equivalent to 2381 Euro. In comparison: The median net income of German pensioners is 1947 Euro per month according to the Institute of the German Economy. A large part of German retirees therefore do not have enough pension income to live in Switzerland.
However, those who do not have sufficient income will not even receive a residence permit: EU citizens can only live in Switzerland for longer than 90 days if they can support themselves. "Retirees need a pension of around 48,000 Euro net, or 4,000 Euro per month, to be self-sufficient," says Jasin Isik. He is the managing director of the financial advisory firm SuisseKasse in Zug and supports immigrants with all questions about emigrating to Switzerland.
In addition to income tax in Germany, pensioners in Switzerland are also subject to a source tax on their pension income. The exact amount varies from canton to canton.
Health Insurance: Immigrants Must Insure Themselves
The financial hurdle for immigrants is high for this reason alone. The price of health insurance for people with low income can be a significant financial burden compared to Germany's statutory health insurance. "One must cancel their old health insurance and take out a new one in Switzerland," says Isik. Each person must insure themselves with the so-called basic insurance. Premiums are among the highest in the world. "One quickly depends on the health insurance, canton, and insurance model between 400 and 550 Swiss francs per month," says Isik.
Cashiers must accept every patient, regardless of their preexisting conditions. The level of pension income does not matter for the premium in this regard. However, the basic insurance does not cover many things that are included in the statutory health insurance in Germany: For example, surgeries outside the home canton, preventive check-ups with doctors, and cosmetic dental treatments. In Switzerland, for instance, fillings also count as cosmetic. Therefore, patients need private supplementary insurances, according to expert Isik. Those without supplementary insurance have to pay for these services themselves.
Private insurers can reject patients. It is therefore advisable to apply to several products and set yourself up with multiple providers, advises expert Isik. Prices for private supplementary insurances vary greatly, and one can quickly reach around 60 to 70 Swiss francs per additional insurance: Added to the mandatory basic insurance, costs amount to approximately 700 Swiss francs, or 730 Euro, in total. The end is not yet in sight: Isik expects a further premium increase of six percent next year.
Increased living costs, high rents
Living costs in Switzerland have recently become more expensive. Food prices in Switzerland are about 20 to 30 percent higher than in Germany. The average electricity price in Switzerland is currently lower than in Germany, however: According to the comparison portal Verivox, the average family in Germany pays 37.37 cents per kilowatt-hour in a year. Swiss residents pay an average of 32.14 Rappen, which is equivalent to 33.52 cents.
The rents and real estate prices depend strongly on the canton. For instance, Zurich is particularly expensive, while St. Gallen is a bit cheaper. On average, Swiss residents pay between 1,350 and 2,500 Swiss francs per month for their cold rent, depending on the size and region of their housing – which is equivalent to between 1,407 and 2,608 Euro. Housing prices are therefore often twice as high as in the home country.
A retirement in Switzerland is not an option for many senior citizens and pensioners with a small pension. However, it can be worthwhile for pensioners with private assets, such as former self-employed persons and private investors. In the Alpine Republic, unlike in Germany, there is no capital gains tax on investments – stock market gains are therefore tax-free. "Even for income-taxable financial investments like renting and leasing, there could be advantages in comparison to the German top tax rate," says Isik. This would – unlike a statutory pension in Germany – potentially be subject to Swiss income tax, says the expert. Whether the move ultimately pays off not only for the beautiful mountains but also financially, should therefore be calculated individually.
Despite the appealing lifestyle and safety, financial considerations are crucial for German pensioners planning to retire in Switzerland. The high cost of living, including Switzerland being the second most expensive country worldwide and the expensive health insurance premiums, pose significant challenges. According to Jasin Isik, managing director of SuisseKasse in Zug, a pension of around 48,000 Euro net is required for self-sufficiency in Switzerland, a substantial amount higher than the median net income of German pensioners.
