An ETF portfolio with a withdrawal plan replaces any pension insurance for most people: cheaper, more flexible, inheritable. How to build it, how to withdraw in old age and where the limits are.
In short
- Build-up: world ETF savings plan plus savings account, equity share falling with age, from 55 gradually to 50 percent.
- Withdrawal: 3.5 to 4 percent of the starting capital a year, inflation-adjusted, has historically lasted 30 years.
- Tax in old age: 25 percent withholding tax only on the gain share, 30 percent partial exemption, often cheaper than an annuity at the full rate.
- Limits: longevity, care, discipline; state pension plus company pension for the basics, the portfolio for the rest.
Why no contract
A private pension insurance costs two to three percent a year, guarantees little, locks you in for decades and pays an annuity that at average life expectancy often does not return the capital paid in. An ETF portfolio costs 0.2 percent, is available at any time and belongs to your heirs on death. The price: you carry the volatility and the decisions yourself.
The saving phase
A world ETF savings plan with 10 to 20 percent of net income, alongside a savings account for the emergency fund and the safe share. Until 50 the equity share may sit at 70 to 90 percent. From 55 you lower it gradually to 50 to 60 percent so a crash shortly before retirement does not hit the withdrawal. Rebalancing does that automatically if you direct new contributions into the safe part.
The withdrawal phase
The four percent rule from US studies: in the first retirement year you withdraw four percent of the portfolio, then the same amount plus inflation every year. At 50 percent stocks the capital lasted in all historic 30-year periods. For Europe and caution 3.5 percent is the safer figure. At €300,000 that is €875 to €1,000 a month. In practice you withdraw from the savings account, which holds three years of withdrawals, and refill it in good equity years; in bad ones you wait.
Tax in old age
On sales from the portfolio only the gain share is taxable, at 25 percent withholding tax with 30 percent partial exemption, effectively around 18 percent of the gain. An annuity from a contract is taxed at the personal rate on the income share or in full with Rürup. With a portfolio with a 60 percent gain share you pay around €110 of tax on €1,000 of withdrawal; whoever uses the investor allowance, less.
The limits
A portfolio does not pay for life if you reach 100 and markets run badly for 20 years. Care costs of €3,000 a month blow any plan. And it takes discipline not to sell in a crash at 75. Hence: basic needs from the state pension, company pension and possibly a small immediate annuity from 80. The portfolio covers the rest and stays flexible.
The model in numbers
35 years old, €300 a month, 6 percent return, 32 years: around €330,000 at 67. Withdrawal 3.5 percent: €960 a month, inflation-adjusted, plus the state pension. Doubling the contribution from 55: €430,000 and €1,250 a month. Whoever starts at 25 needs €170 for the same result.
Try it yourself
Pension Gap CalculatorAge, net income, expected pension: how big your gap is and which savings rate closes it.ETF Savings Plan CalculatorContribution, return, term: how your savings plan develops over the years, with a chart and compound interest.Frequently asked questions
What about withholding tax when I sell?
The broker pays it. On sale the oldest unit is sold first under “first in, first out”; whoever keeps two portfolios can steer that for tax.
Can I convert a portfolio into an annuity?
Yes, at any time via a single premium into an immediate annuity. Sensible from 75 to 80 for basic needs when life expectancy turns the calculation.
Should I leave stocks entirely in old age?
No. A retirement phase lasts 25 years, and 40 to 50 percent stocks preserve purchasing power. Whoever holds everything in a savings account loses to inflation.
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