Early Retirement · Financial Independence

Setting my FIRE number 2020 update, when can I retire early?

Previous blogs: Setting my FIRE number: when can I retire early? (2020)

In 2020 I made a first attempt to update my FIRE number, I was not really sure how to calculate it yet, as there was no sure way to calculate this in Belgium. Most calculation models are based on a US model where people need to save themselves fulltime for their retirement. In Belgium the situation is a bit different, as we have three pillars for our retirement

What pillars do I have?

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The 3.5% rule

Before starting I just wanted to give a quick recap on what we call the 3.5% rule. Actually a lot of FIRE blogs will stick to the 4% rule, but the 3.5% rule is actually a lot safer. It assumes that the stock market will go up every year on average with 3.5% + the inflation rate, giving you enough money to survive every year. You will not have to worry about the stock market going up or down, as it usually does, but instead you just take 3.5% of whatever is in your portfolio every year and survive on that. That should be small enough to have an ever-lasting portfolio.

My state pension

If the law does not changes I will get my state pension at 67. This is the age that the government wants people to retire. There is an online app called mypension.be where you can actually see how you get at the retirement age.

While many European Countries give a pension this pension only comes at a late age. In Belgium its 67! It might be that by this age the age has moved back again. You shouldn’t take the risk to let the government decide on when you can retire. At the very least you need a backup plan.

But assuming that everything is going like they tell me now I will get a pension at 67. The height of this pension is depending of how much taxed you paid and mostly how long you worked. Additionally you can buy off educational years (up to 4) that you studied. This is quite cheap if you do it within the first 10 years after graduation, but after that becomes expensive fast. Its especially useful if you plan to retire before 67, if not then its probably not so useful for you. I have bought off these years for this reason.

My pension looks like this, it means the longer I wait to retire, the higher my pension will be.

You can see that if you work until 67 that even then the retirement money is not so high, only 1934 EUR, unless you own a home it will not be enough to have a comfortable retirement, especially since you will have more medical bills and probably more staff such as house cleaners since you can do less yourself. In other words, additional funds will be needed. So that means even if you do not plan to FIRE you really should start thinking about how you will manage when you retire as the state pension will most likely not be enough.

In case you want to do the simulation yourself (as a Belgian citizen), you can do this on mypension.be

The second pillar: Occupational pension

My previous job invested about 1% in a work pension, my current job even invests 6% of my yearly wage into a work pension. That’s quite interesting, because as it turns out it can grow to quite high by the time you are 67. The downside here is that the growth is limited by the minimum growth the government says the fund should have, which is pretty much the inflation. Still its a very nice boost you would get at 67. Using the 3% rule it would give me an additional 637 EUR at 67 if I kept working until then.

The Third pillar: private pension

The third pillar includes an extra pension saving plan that the government is giving Tax advantages for. You can save about 1260 EUR per year in an additional pension fund and withdraw 30% from your taxes when you fully invest inthere. The downside is of course that these funds come with considerable costs and the returns are not necessarily higher then what you invest yourself. I do invest fully in these funds because:

  • Its only 1260 EUR per year
  • The less taxes I pay the better

For the growth of this fund I have assumed a modest 3% growth per year, this together with my yearly investment, gives me the following income at 67, depending of when I stop working:

So another 252 EUR income IF I stay on the job force until 67, giving me a total of 2854 EUR. I would say this is good news. If you are in the workforce, and don’t want to worry to much about retirement and don’t mind to work until 67 then your pension should be high enough to cover your retirement.

Its only when you want to retire before age 67 that you run into a problem. Say you want to retire 10 years earlier I would only be left with 2242 EUR at age 67 plus I would need to find a means to survive for an extra 10 years. It gets more difficult if I wanted to retire at age 47, as then I would only have 1644 EUR at 67 plus a 20 year gap I would need to fill.

The fourth pillar: other investments

This is where my fourth pillar comes in. While officially its part of the third pillar, I prefer to classify this under a second pillar. This is where you store your additional investments in real estate, the stock market or other type of alternative investments.

In my case I plan to invest right now about 800 EUR per month in this fourth pillar. I already have 47.000 EUR invested inthere. The good thing about this investment is that you can start withdrawing whenever you like, so you can use this portfolio to bridge the gap between when you retire and the official age of 67.

Now I am assuming a growth of 6% per year for this porfolio and with a monthly investment of 800 EUR per month, the growth cycle looks like this:

Meaning at age of 67 I would be able to withdraw 3220 EUR safely or combined with my other pillars almost 6000 EUR. A pretty wealthy retirement right?

What about retirement before 67?

Right the interesting part. Of course we don’t need 6000 EUR / month to survive. Even half of that would give us a very comfortable wealthy lifestyle.

There is two main things that affect your retirement age: how much you invest, and how much you spend. I really do say how much you invest and not how much you save, as you might be setting aside money for other goals as well. In my case I am also setting aside cash to invest in a house for myself so I am not investing everything that I save. Its important to make this distinction for yourself as I really do consider housing to be important.

But for those who want to retire before 67 (or who knows it could be higher as the government increases this number)

Lets calculate my FIRE number

2019 Recap

In 2019 I calculated that my FIRE number was 983350 and I was 3.7% along to FIRE. This was based on my current portfolio and a yearly expense in 2019 I had of 29501 EUR!

I did had 29501 EUR expenses in 2019, but also a great income. This year my income dropped with about 20%

It was a pretty huge number, both in terms of expenses as in terms of FIRE number.

What changed in 2020

In 2020 I had about 25000 expenses, so I actually managed to lower my expenses with 4500 EUR! Thats pretty nice. Lowering expenses actually makes it easier to retire. For me I noticed I spend huge amounts on restaurants so just cutting these out already allowed me to save a lot more. Granted Corona did help a lot with that!

I calculated that in 2019 I needed about 27 years until I FIRE’d. This was still better then the 32 years to go to official retirement. My income dropped with about 20% in 2019 because of Covid, however because expenses matter so much in terms of FIRE, I actually managed to cut off another 8 years from my retirement. I am now planned to FIRE in 20 years! Of course I want to try to lower that a few years more. This shows to me that FIRE is not a one set number you calculate once and it stays like that, infact lots of things can influence your FIRE number such as buying a house or having children. Its not because today I can FIRE in 20 years that this will be the same number next year.

I can also say that where in 2019 I was 3% FIRE, I am now 6% FIRE. This is going up slow, but thanks to compound interest the number will accelerate as it grows larger.

How to deal with purchasing a house, children

Well its because of these additional expenses I am only investing a fixed amount. That means higher saving rate does not necessarily lower my retirement age. I invest a fixed amount of 800 EUR in the stock market every month. Once I bought my house then I will consider to increase this number, but I expect it to be fixed in 2021.

Additionally I am slowly starting a house-saving portfolio. So far I put money I saved for a house in the money market, but I realized that the hunt could take longer then expected and then its good to be covered somewhat for inflation. It remains risky to do something like that because it might be cash I need on the short term, but I found that keeping it in money market is just as Risky, as the prices of houses go up and the value of cash goes down. To limit the risk I am moving the cash with about 2000 EUR per month from money market to the stock market. More about that in my December portfolio update!

Interested to follow my progress? Follow me and join me on my Roadtrip to Financial Independence!

Early Retirement

Five steps to take in 2021 to start your FIRE journey

FIRE is a marathon, not a sprint. And like any marathon you need to prepare. You won’t know where you are exactly until you prepared. With a new year coming up now is the perfect time to set these first steps! Trust me all the calculators online and simulations online will not be able to tell you the same as your very own data.

1. Start to track your income

Probably most people will be able to give some indication of how much they make per month. But what about your holiday bonus or end of year bonus? What about your tax returns? What about side incomes? They are quite common in Belgium but most people don’t know how much this exactly is. So how much do you actually make in a year? How much is your income rising each year? Start writing this down every month, and do this for at least a full year.

2. Start to track your spending

White tracking income is for most people fairly easy as its just writing down wages and tax returns every month spending is a bit more challenging.

Now firstly you need to decide where you write this down. My personal favorite: google sheets. You have it online, on your phone and has all the basics you need to start.

To make it a bit easier to input data into google sheets you can use side tools. For example KBC has a very good tool that is already displaying your expenses in different categories. I use much of the same, or at least very similar, categories in my sheet. Check out what they are on my monthly savings rate reports. My categories might not be the same as yours by the way. You don’t want your categories to be to small or to large.

3. Research investment opportunities

Rushing into investing might be an expensive lesson. Do your research first. Check out FIRE bloggers who have been on this journey for years and learn from their winnings but more from their mistakes. For example when I started I thought peer to peer was a good way to reach FIRE but it turned out to be very risky.

98% of people going for FIRE will concentrate on the stock market and real estate. Stay away from alternative investments and go for the types that are proven to work.

4. Find out what really matters in life

FIRE is about what really matters to you in life and what makes you happy. For example when I started tracking my expenses I found out I was spending 500 EUR on restaurants per month. To be honest I eat out to be around people, I personally don’t mind that much if I eat a home cooked meal or a 3 star menu in a restaurant, its just fun being out.

So I budgeted myself at 100 EUR per month for restaurants, avoided high-cost restaurants and ordered more often simpler food if I did go out, like croque monsieur for example.

In order not to alienate myself from others I started focusing more on sports and found that this is actually a good way to be around people as well. One downside is that sports costs as well. But at least when you buy stuff its much longer lasting then a 1 hour meal.

Find a good balance between going for FIRE and living your life. your life on hold to save every penny. Knowing what makes you feel good and what can make you happy without spending needlessly is a good start. Make sure you make progress but also avoid putting your life on hold since even in a marathon you need to stop for some food and drinks from time to time to keep you going.

5. Decide on why you want to retire early

Lastly you need to know why you want to retire early. This will help you in your journey to make the right choices. In my case its not necessarily because I don’t like to work (although I do have some of those days) but its also to keep my options open, and because I don’t fully trust the Belgian government that they will have enough money in 30 years to let me retire safely.

2021 is coming and its the perfect time to start to plan! Remember this is your preparation, only when starting these 5 steps you will be able to take the next step to calculate when you can actually FIRE.

Early Retirement · Financial Independence

Setting my first FIRE number: when can I retire early?

How could I have FIRE blog without a plan to retire early? Its time to change that!

What is a FIRE number?

Your FIRE number is the number you need to retire. Its the amount in investments you need to reach before you can officially say you have enough money to no longer work for the rest of your life.

While many European Countries give a pension this pension only comes at a late age. In Belgium its 67! It might be that by this age the age has moved back again. You shouldn’t take the risk to let the government decide on when you can retire. At the very least you need a backup plan.

How do you find your FIRE number?

So how do you calculate that number? The first thing you need to do is to track your expenses. If you don’t know what you are spending you will not know if you can retire or not.

Once you have written down your monthly expense every month for at least a year, then you can calculate your fire number. You just add all months up together then you divide it by 3.5 and you multiply it by 100.

3.5% is the number you could withdraw reasonable safe every year from your portfolio without needing to worry about money for the rest of your life. The stock market still goes up 6-7% by average so normally your portfolio should even grow with this number.

There is different numbers outthere. Most of the FIRE community choose 4%, and actually 4% is quite safe for the majority of the time. But I feel its always good to build in a little bit extra safety. But if the stock market goes up 6% per year why not choose 6% as withdrawal rate.

Well first there is inflation you need to keep into account, but secondly if you choose your number to high and you retire just before a big financial crisis hits then you could be in trouble. The worst year to retire was actually 1929. The second worst was March 2020, just before the dot com bubble busted.

On reddit I found a post of someone who tracks the portfolios of people who retired early in march 2000. This is how their portfolio survived based on their withdrawal rate. Check out what happened bellow:

It is not looking so good with their portfolios. However do not panic, we need to keep in mind this was the second worst period to retire. The odds that this happens to you are rather slim. And even in these times of big economic crashes, most portfolios are still surviving. We can see the 2% and lower are very safe choices.

So why did I chose 3.5%? Well firstly at 67 I expect a goverment pension. So I do not need my money to last a lifetime. If all else fails I can fall back on that. As you can see on the graph 3.5% can easily survive long enough to reach 67, even in the worst of times. Secondly I will also diversify with property so that if one investment is doing bad I can fall back temporarily on the other. 3.5% return net is realistic in Belgium on property. Should my retirement age get closer to my pension age (such as 55 for example), I will probably switch to the 4% rule.

So lets calculate my FIRE number

Now as I have been tracking my expenses rather well last year, and even better this year, I feel its really time to calculate how much I need to retire early.

According to my data in 2019 I had a total expense of 29501. Now there is some notes to make here. I drive a company car, have a company laptop and my company pays for my mobile phone subscription. These are all items I would need to take into account. So normally I should foresee some budget for that. However I am also currently paying off three loans (as you can see in my yearly expense). I do feel that I will make sure that I am loan free by the time I retire, so these will balance off.

So if I count make the calculation 29501 / 3.5 * 100 my FIRE number in 2019 was 983350 EUR! This is the amount I need to have in investments to be able to retire.

I guess this is why I never calculated it. I expected it to be HUGE. And it is. It shows that in 2019 my expenses were way to high. Most months I spend around 3000 EUR and now its clear that this was just way to high and I should live more frugal. Corona really helped me with that. Instead of going to restaurants or to bars I ended up having picnics outside. True…it did came on the right time, it was spring and we had some really nice months, but I still feel I can beat my last years expenses and do much better without going back on life quality!

So when can I retire?

Some people set their FIRE number and then do not change anymore. I noticed that my expenses change slightly every year. If I manage to lower my expenses then my FIRE number drops. If I spend more then my FIRE number goes up. I decided I will update my FIRE number every year based on the expenses of the last 12 months.

Now that I know how much I need to retire based on my expenses of 2019, I can also calculate when I can retire. However in this phase of my life there is just to much uncertainty. I am looking for a house, I might still have children, I don’t know how much my future partner would make, if she would be on board with FIRE or not,…

But I can calculate how far I am along. I know it will be depressingly low but seeing the number go up every year will be so motivating, that’s why its important to write it down, even if there is such a long way to go!

Now when looking at my monthly portfolio I only want to take into account my liquid investments. I do have a portfolio with retirement savings as well, but they will not come free until I’m 67. While I really do support to have them, as they will give an extra boost at retirement, I will not be able to use them right away if I retire early.

I have a total of 37256 EUR in my portfolio. First the good news, having this amount of money means that every year I would able to safely withdraw 1303 EUR. While this is a nice amount, nobody can really live from that. The bad news is that if I calculate that its only 3.7% along to retire early. But at the same time if I listed this in 2018 it would have been even a lot lower.

What I don’t want to do at this point is calculate how long it will take me to reach that. Even in the very short term I feel so much can change in my life, I rather just measure it every year and once I am closer to the end I will add a timeline.

I plan to work on both raising my investement portfolio and lowering my expense ratio. I feel if I manage to keep improving both sides then I will grow faster and reach that early retirement. Remember its a marathon not a sprint and creating your first fire number is the first step in reaching the finish line!

Progress to FIRE

Along with my FIRE number comes a brand new meter that will track my Roadtrip to financial independence!

[ultimeter id=”2861″]

Interested to follow my progress? Follow me and join me on my Roadtrip to Financial Independence!

Early Retirement

How to pay less taxes in 2021 by spending the right way in 2020

With an average wage in Belgium of 3489 EUR per month or 41868 per year that means a slight majority of the Belgians will pay 50% taxes on their wage or 20934 EUR! No wonder that we are looking for ways to lower these taxes. And ways to lower there are! For the government offering lower tax rates is a friendly way to steer people’s behavior in the right direction, for us its a way to bring one of the highest tax rates in the world down a little.

Investing in stocks that give a dividend – 240 EUR

The Belgian state has a 30% tax rate on all dividends. However not all people know that dividends from stocks are free of taxes for the first 800 EUR. That means you will pay 30% taxes or 240 EUR for every 800 EUR of dividends but you will be able to get this money back.

Keep in mind this is only for regular stocks, so ETFs or Funds do not fall under this category! If you are looking to invest in stocks then check out DEGIRO which is the broker I use and recommend. Find out why I moved to DEGIRO.

Retirement saving: 315 EUR

Every year you can deposit 1260 EUR and withdraw 25% or 315 EUR from that. This is my longest running tax withdrawal post. I started with this right after I had purchased my first property. The earlier you start doing this the bigger the effect will be. When you reach the official retirement age you will be quite happy that you had invested 1260 EUR every year. Keep in mind its just 1260 EUR, you will not feel it that much.

My retirement savings account

Buying off educational years: 4173 EUR

For people interested in stopping with work before the official retirement age in Belgium buying off the years you studied is almost a must have. Buying off these years is quite expensive but it will increase your income after 67 quite a lot, especially if you stop working before 55. Be aware that after 30/11/2020 it will become a lot more expensive if you graduated over 10 years ago. You can actually do the calculation yourself on mypension yourself and see if it is worth it for you.

An example of a calculation. To the left the amount I would get when I work until 67 (1934 EUR/month), to the right the amount if I work until 50 (1446 EUR / month – that I get from 67)

Keep in mind that if you plan to work the MAX number of years before your retire this will not give a benefit, this is only useful for people who want to reach financial independence before the official retirement age.

You can buy off max 5 years at 1560 EUR per year. You can get a tax advantage of that of, depending of your income, 50% + community tax (lets say this is 3.5% average in Belgium). Assuming you studied for 5 years and have an average income you can subtract 4173 EUR from your taxes in 2021.

For anyone that plans for Financial Independence Retire Early this really is a must have, it will give you much more financial security after 67 even if you retire at 50.

After I bought of the years they appeared in mypension as”worked years” (in yellow)

Long Term saving : 717 EUR

Since 2020 you can no longer subtract taxes from purchasing your first house. This regional Tax Withdrawal was canceled both in the regional taxes as in the Federal. However there is a way to still get taxes back from real estate purchases called “Long term saving”. This is a Federal tax withdrawal post that is meant to “save long term”. You basically can save 2390 EUR per year, and subtract 30% taxes of that or 717 EUR.

Now if you still have to purchase a home you can save for the long term with your bank (ask your bank for details), and most banks allow you to use your long term saving to cover your debt insurance in case you pass away and your loan is not paid off yet. Most banks force you to take this insurance, which everyone knows but what you might not know is that most banks also allow you to cover this with whatever is in your long term savings account.

If you already purchased a home you can use it for the debt insurance of your second home, but also you can actually subtract the interest of the loan of your second house as the Federal government also considers this as a method to do long term saving!

Investing in Startups

Another method to pay less taxes is to invest in Startups. I have invested in startups myself. Keep in mind it needs to be a recognized Belgian platform such as spreds for example. What most people don’t know is that you can actually subtract 45% off your taxes for the smallest startups. But keep in mind this is a very risky investment. I would recommend to do it only with small amounts with money you can afford to lose, and more as a hobby or things you really believe in and would want to use yourself.

Please keep in mind that these investments are very long term and it can take 5-10 years before you see anything back. Although I consider all my investments long term, for stocks you do have a much higher liquidity in the unlikely event you need to sell.

My investments on spreads

Donations

If you make a donation make sure its at least 40 EUR and to a recognized institution. If you do it this way you can deduct 45% from your taxes. While I am sure this is not the main reason people donate if you have the choice to donate to an organisation on the street or do it online on the website its better to use the website so you are sure you will get some money back the next year and you supported your favorite charity!

Service Cheques -210 EUR

Flanders

My remaining service cheques

Another method in Flanders to get some taxes back is service cheques. Service cheques are cheques you can use for services such as cleaning in your home or ironing of your clothes. For the first 500 cheques you can subtract 30%. A cheque costs about 9 EUR so you can substract 2.7 EUR. per cheque. So for example assuming you let someone clean your house for 3 hours every 2 weeks you will be able to subtract 210 EUR. Of course it will still cost you 702 EUR in a year.

What we see in this withdrawal post is that the benefit has been dropping every few years so it might not be so interesting anymore for a single person household. The major reason for me to do this was an investment in my time. By investing in my time I was able to spend time on other things such as blogging or doing sports that actually do make sense.

Brussels

For those living in Brussels there is a similar system. Altough the tax refund is much smaller, you are able to subtract only 15% or 1,63 EUR per service cheque and this for the first 163 cheques. I still think for a family or couple its worth doing this, although I am not sure for a single household.

Wallonia

Those living in Wallonia are the worst of. They can only substract 0.9 EUR per cheque of 9 EUR.

My personal tax plans

I wanted to be open with what I personally spend, although all the items above are things I have done in the past or am considering, what we can see so far is that the withdrawal for 2019 is quite small with 1267 EUR, but this year I am on my way to get 3678 EUR back from the Tax man!

 Spend in 2019Tax Benefit 2019Plan 2020Expected 2020Comment
Stocks0000Right now I prefer to invest in ETFs
Pension Saving12603151260315I will continue to invest the MAX every year
Buy off educational years0062403363I bought these off in February 2020
Long Term Saving00TBD TBD Q4 2020
House000  
Tax Shelter16007200 For now I will not invest more here
Donations5022,5TBD I want to donate more this year
Service Cheques720210TBD The Tax benefit drops every year so I canceled it in May
Total 1267,5 3678 

Interested to know more? Check out some other articles on my blog, or follow me and stay up to date of the most recent news!

Early Retirement

Increase your pension and lower your retirement age

Legal versus actual retirement age in OESO countries

When we look at the actual retirement age versus the legal age, we can see that the real age is in most countries, especially Western countries, bellow the legal age. The government cannot force anyone to work, but at the same time they are not required to provide a pension (until the legal age) when you decide to stop earlier.

Green = legal retirement age, orange = actual retirement age

I live in Belgium, in Belgium the age to retire is 67, although the real retirement age is 59 (average) in Belgium. So you can decide to stop earlier, but then you face some consequences:

  • The pension you receive at 67 will be lower
  • You need to provide your own funds to bridge the gap between when you get a government pension and when you actually retire

The majority of the Fire blogs are aimed at getting enough funds so you are self-sufficient when you retire. Up to at least until you get a legal pension, and preferably even beyond (as there is no certainty the government will not be bankrupt when you reach 67).

It also pays to look at how you can increase your legal pension when you reach age 67.

First its good to know that a standard retirement exist out of what we call three pillars. The basis here (like in the picture) is very similar in most countries.

  • Official pension from the government – first pillar
  • Employer sponsored pension funds – second pillar
  • Personal pension funds – third pillar
  • There is also a fourth pillar, which is basically anything you have personally saved up or invested. The fourth pillar is actually what most Fire blogs are focused on but they forget about the first three!

The third pillar

I am going to start at the back. The third pillar you can increase only by adding funds to an official refinement funds. It is your personal funds, but you cannot access it until you reached the retirement age (unless you pay a fee).

In the case of Belgium, a total of 1270 Euro per year can be deposited here, and can be withdrawn from your taxes for 30%.

Basically you really should max this out every year. The 30% is just to high to ignore. Ideally you deposit it in January. This really is the best time. If you do not do it in January the second best is depositing it monthly. December is the worst timing to do it.

If you deposited in January, you have potentially 6,5% more profit at the end of the ride. Bellow you can see the difference for a period of 30 years, depending of when you deposit.

Second Pillar

The second pillar is harder to control. You usually need to be lucky with your job that your employer has what they call a group insurance. It has a fiscal advantage in Belgium (you keep about 75% after taxes, while with normal wage its about 30% – yes taxes are huge in Belgium), but still not all employers do this. If 3-4% of your wage goes to a group insurance its usually considered quite high.

First pillar

The first pillar is the legal pension. Most people think the only influence they have on this is the age they retire and the wage of the last years they worked. In Belgium you can actually increase it further, especially if you retire before the legal retirement age this is beneficial.

On my pension of the Belgium government, you can actually request (against a fee) to make 4 years that you studied part of your pension, so they count as if you were working this year. This costs about 1500 euro per year that you request this for, but you do get 50% back from taxes. So for 4 years it in total costs you about 3000 Euro.

If you decide to retire at the legal age of 67 and you have a high wage, this is most likely not beneficial for you. But if you decide to stop working before the legal age, this will actually have a huge effect on your pension.

On mypension of the government I did the calculation. If I retire at age 67 without buying the years I would earn only 13 euro/month more then when I decided not to buy the years. This would then take me 19 years to get the 3000 back. Obviously I can invest my money myself much better then this.

However if I retire at the age of 52, so 15 years earlier then the legal age, I would make about 50 EUR/month more. So it would take me 6 years to get my money back and anything after that is pure profit. You could argue that if I invested 3000 euro myself, at a compound interest of 5% this would be about 6800 euro at age 52. But nothing is certain in investing, and its good to spread your investments and diversify. The fact that I probably will retire before 67 and this made me decide to invest some money in this plan.

What do my pillars look like so far?

  • I invest the full 1270 EUR every year as early as possible (I recommend to start doing this as early as possible when you start working)
  • My first employer, a job that I did for about 4 years, invested about 1% in the first pillar
  • My current employer invests about 3% (I am doing this job for a little over 5 years)

In my case I have 65% in the second pillar (spread over 2 jobs) and 35% in the third pillar. The first pillar, is the legal pension as you know.

Now you can also see the difference between 1 and 3%. So it does matter a great deal of how much your employer is investing there. To be honest when I see this graph I am even amazed of how fast my second pillar at my current job is growing compared to the third pillar.

Unfortunately you can only access these funds at age of 67, however they are invested into funds, and will benefit from compound interest. Even after you withdraw them from your account it would be wise to invest them into Dividend EFTs/Stocks/Funds to make sure you get a regular income from them (and maybe they grow a bit more).

How do I plan to bridge the gap, if I were to retire, at say age 52? For that take a look at my goals page and check how I slowly plan / experiment to increase my passive income, at a reasonably young age (I am 34 at time of writing), to fully utilize compound interest.

Some things I have experimented with and still am:

What about you? Let me know if it works different in your country, or what your plan is to increase your pension at the legal retirement age. Also any other tips would be welcome!

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