Retirement Planning - Swiss Bank Account?

Jenna

Hey,

Given I'm only 19, I guess it seems stupid to be wondering about retirement, but with the Pensions Crisis (some of my friend's parents are short of money now because of it) I was kinda worried about the future.

I've been wondering about opening a Swiss bank account just to hold retirement funds, simply because it's probably the most risk-free place in the world to keep your money; if the banks in Switzerland crash, the whole idea of money crashes, lol.

Also (and I hate to say this, but I gotta) I like the idea of having money "stashed away" in secret; it's something I don't need to declare even if I get married or something, right? The only reason I ask is that both my current boyfriend (who I'm possibly about to move in with) and my immediate family have money problems (I've recommended this site to them, and my boyfriend at least is really starting to get his finances straightened out , but even so!). Call it paranoia, or a basic Scrooge instinct, but I don't want to be back at work when I'm 70, you know?

So... any information on Swiss bank accounts would be very welcome. Thanks guys

xx Jenna xx

cheerfulcat

Hi, Jenna,

It's not at all stupid to be thinking about your retirement; starting at such an early age, you have the chance to build up a super nest egg, which will cost you far less than it would if you started ten years later. However, keeping your retirement money in cash in a Swiss bank account presents some problems. For a start, you'd need quite a large sum to justify such an account. Also cash provides a very poor return over the long term.

Also (and I hate to say this, but I gotta) I like the idea of having money "stashed away" in secret; it's something I don't need to declare even if I get married or something, right?

You'll have to declare any interest earned to the taxman. As far as your boyfriend is concerned, it's been a very very long time since a man had an automatic legal right to know his wife's business :-).

You could consider a pension, btw; whether anyone knows what you have stashed away in there is immaterial, as it can't be touched until retirement time. This is both an advantage and a disadvantage, of course, and deciding to pay into a pension, particularly a personal pension where an employer doesn't pay contributions, takes a bit of thought and research.

Good luck

Cheerfulcat

lush_walrus

Not a bad idea to start thinking about your future at all and very sensible not to take on the problems of your boyfriends money either.

I agree with the above that swiss accounts would not be the right thing for you.

You dont say whether you have already started to save, but what about an isa if you dont already have one? You can put £3000 into a cash isa a year and leave the money untouched, that may be a good start.

How much money do you want to save per year?

dunstonh

Much of the pensions crisis is media hype coupled with a stockmarket crash some years ago which has yet to recover and people not saving enough for their retirement. Over the period of saving in a long term contract, like a pension, you would probably expect to see 4 stockmarket crashes. A short term decline is not a bad thing as you get to buy those investments much cheaper than before the crash.

19 is the perfect age to start paying towards your retirement. Lets just say you started 50pm now (increasing annually with inflation). If you were to delay that to 25, you would be looking at £110pm just to get the same retirement income as starting with £50 at age 19.

With house purchases likely to come in the future it is easier to have a £50 pension bill (which is on par with the gas bill) rather than £110!

EdInvestor

But do remember if you save in a pension you can't access any of the the money until you are 55 and then only 25% of it in cash.

If you think you might want to use your savings before then ( for a deposit on a property perhaps?) save in an ISA - you can either put get a cash or a stocks and shares/funds one. No tax and no restrictions on the money in an ISA.

isasmurf

Jenna wrote:

Also (and I hate to say this, but I gotta) I like the idea of having money "stashed away" in secret; it's something I don't need to declare even if I get married or something, right?

As Cheerfulcat has already pointed you are legally bound to declare this to the taxman. However, Switzerland will not provide the UK taxman with your details, but they will apply a withholding tax of 15% on all interest received by EU citizens, rising to 35% by 2011.

HGLTsuperstar

isasmurf wrote:

As Cheerfulcat has already pointed you are legally bound to declare this to the taxman. However, Switzerland will not provide the UK taxman with your details, but they will apply a withholding tax of 15% on all interest received by EU citizens, rising to 35% by 2011.

Absolutely, so I recall reading that those accounts are being moved to Barbados ( I'm serious!)