Does pillar 3a count towards your FIRE number?

The rule that does not fit here

The common rule of thumb: save twenty-five times your annual spending, then withdraw four per cent a year without eating into the capital. At 48,000 a year that is 1.2 million.

The rule assumes you can get at the money. In Switzerland a substantial part of retirement wealth sits in pillar 3a and in the occupational pension fund, and both are locked until shortly before the ordinary retirement age, reachable somewhere around sixty. What applies to you is in your pension certificate and in your fund's rules; the sum below does not change because of it, only the year does.

One case is worth knowing if you are here on a contract rather than for good. Leave Switzerland permanently and the 3a balance can be paid out, which removes the lock entirely. Whether that applies to you is a question for your provider, not for this page, but it turns the calculation below into a different one.

Two obvious answers

Take someone aged 42, spending 48,000 a year, so a FIRE number of 1.2 million. The brokerage account holds 380,000, pillar 3a 95,000, the pension fund 340,000.

Count only what is free. 380,000 out of 1.2 million, or 32 per cent. That is the cautious answer, and it ignores 435,000 that genuinely exist.
Count everything. 815,000 out of 1.2 million, or 68 per cent. That is the optimistic answer, and it pretends you can reach a pension fund at 45.

Thirty-six percentage points apart. One number says "halfway there", the other says "nearly done".

The question underneath

Both answers are too simple on their own, because the lock is a date rather than a yes or no. What matters is how many years sit between the day you stop and the day the locked capital opens, and whether the free part carries those years.

Same example. Stopping at 50 means bridging ten years until the locked capital becomes reachable. Ten years at 48,000 is 480,000, and the brokerage account holds 380,000. You are 100,000 short, however good the headline number looks. Stop at 58 instead and there are two years to bridge, which the same account covers easily.

So both views earn their place. The free view answers whether you get as far as the lock. The total view answers whether it lasts afterwards. Keep only one of them and you have answered half the question.

The catch in your savings rate

A point that slips past easily: paying into pillar 3a does not raise your free wealth. It is still a good idea, since it saves tax and compounds. For the question of whether you can stop at 50, though, it works on the wrong side of the lock.

Save thirty per cent of your income and put a decent share of it into 3a, and your headline number grows faster than the part that carries you to the lock. When you look at your progress, it pays to know how much of your saving actually lands in the free pot.

The third kind: wealth you never draw from

The home you live in belongs in neither view. It sits in your net worth, often as the largest item, and is still not capital you live off. Live in it or live off it, but not both.

This is the most common mistake because it flatters the number hardest. A flat worth 900,000 lifts a net worth of 815,000 to 1.7 million and makes the FIRE number look reached. You can sell it, but then you need another one, and the rent for that is already in your annual spending.

A property you rent out is a different case: it produces income, and that income replaces a withdrawal.

How Parendi calculates it

Parendi is a personal finance app for the Mac, and the three kinds above are its structure. Every asset position is free, locked or excluded from withdrawal. The first two produce the two views, which sit side by side rather than asking one number to answer both questions. Positions of the third kind count towards net worth and towards neither view.

For the savings point, the app estimates how much of your saving lands in the free pot, derived from the ratio of free to locked growth. The figures behind all of it come from the statements you import and the asset values you record. More about the app, or the features in detail.