Late career

Plan 1: Get your finances under control - it's never too late

The sooner you start saving - the better. But many are in doubt about what their financial situation really is, especially in light of rising interest rates, inflation and energy prices. Talking to your bank and your pension company is a good place to start.

NOTE: IDA is a trade union and does not advise on private financial matters. But here we give a number of good pieces of general advice and refer to our relevant collaboration partners.

Personal finances have a great impact on how many of one's wishes for life can be fulfilled. This also applies in the late career, where expenses, salary, pension scheme and savings must go hand in hand with one's wishes for how long and how much one wants to work.

Or a little more directly:

  • How much money have you saved together?
  • How much money do you expect to spend?
  • How long do you intend to live?

The current situation with inflation, high energy prices, rising interest rates and falling property prices makes it extra important to review your long-term finances and resilience.

An overview of your finances will give you a good foundation to work on with your career plans and life as a pensioner.

And don’t worry. If you can't give a straight answer about how your finances are doing when you retire, you're not alone.

But the earlier you prepare, the better your opportunities are to decide for yourself and thus influence your future in a positive direction. The one thing you shouldn't do is ignore your finances.

Some will discover that their finances are less strong than they believed, while others find that they are better off than they expected. But you can always make a difference with an active effort.

Here’s how to get started

If you are unsure whether you have the full overview of your future finances, then it is a good idea to start by contacting your bank and your pension company and get an overview. Feel free to start by looking at your current pension situation at pensionsinfo.dk, so that you are prepared for the discussion.

What to consider

Are you on your way to retirement, or do you still have a few years? In all cases, you have expenses both now and in the future, and this also applies to income. There are some general things that you can decide on right now, so that you can afford it all.

  • Your current and future expenses
  • Your financial situation
  • Your pension plans

Your current expenses

Your current spending affects your future opportunities. You should think about both in your priorities and choices in your personal finances.

We recommend that you reflect on the fixed expenses you currently have and also on your spendings. It may well be balanced and at a financially sound level, but still consider whether anything needs to change. For example, is it worth it to energy-optimize your home, restructure loans or otherwise influence your expenditure level, so that you have more room to maneuver in the future.

Some do best with a budget, while others prefer not to. If you choose to set a budget, you can set it up in an Excel spreadsheet, then it is easy to go back and adjust the budget.

How much money you need when you retire is of course individual. The Consumer Council Tænk says that you should have 70 - 80 per cent. of your final salary, others say seven annual salaries.

But unfortunately it is not that simple. You should look in more detail at your expected expenses, possibly supplementary income, when you expect to retire, and maybe even how old you expect to be. On average, a 60-year-old man can expect to live to be 85, while a woman can expect to live to be 88.

Your expenses are affected by how you want to live as a pensioner. Most people want to continue their current lives - perhaps spiced up with an extra trip or two.

In return, you stop making contributions to pensions, labour market contributions, cash contributions and the IDA membership fee becomes smaller.

It is an equation with a number of unknowns - which it is wise to get help figuring out. Most banks offer advice in connection with pensions. And even if the banks are not completely impartial, the vast majority benefit from considering the bank's input about one's finances.  

Along with close to 50 other professional organisations, IDA owns Lån & Spar Bank, where as a member of IDA you can get a number of special benefits.

Your current finances

Your expenses are one thing, while an overall overview of your finances is another. You can have many assets, savings, income, free assets, etc., which you may not think about.

We recommend that you create an overview of your entire financial situation – here too, an Excel spreadsheet is suitable, so that you can always revisit your financial overview.

Here are just some of the things you need to keep in mind in order to get a clear picture of your finances.

Your home

If you own your home, many people have a residual value that can either be activated in the form of savings or simply ensure that your fixed expenses will be lower when you retire.

Free funds

Perhaps you have shares, bonds or simply money parked in an account.

Other assets

You may have a summer house, several cars, or valuable possessions that you may want to sell.

You work part-time

Perhaps you will continue to work part-time for a few years. It gives you the opportunity to reduce the pressure on your savings and thus improve your finances.

Your future pension

Most people save for retirement through several different schemes or savings, but many do not have an overview of their total pension assets and the expected payments that will cover expenses in the future. We recommend that you form an overview of your expected pension payments to ensure that you also have finances that match your wishes at that time.

With an overview, you will also find out whether it is necessary to contribute into the pension before you start the payouts. Here are some of the typical pension schemes and savings that you should be aware of in order to form an impression of your future pension payments.

  • Labour market pension, which is paid through your employer and is typically the most important of your pensions.
    Many IDA members have their primary pension scheme in ISP , where you can read more about options, rights and what to keep in mind. But all pension companies provide advice on savings and the transition to pension.
    Then contact your pension company about your options.
  • ATP Lifelong Pension, which is a statutory lifelong pension that most people of working age pay into.
  • Private retirement savings, installment or capital pension
  • National pension
    There are new rules, so that neither the national pension nor the pension supplement is set off against your own or your spouse's/partner's earned income.
    Cessation of offsetting in own earned income was adopted by the Danish Parliament on 1.6.2023 with retroactive effect from 1.1.2023. Read more here.
    Read more about public pension in general at borger.dk.
  • Retirement pay is not a pension, but is paid by your unemployment insurance fund. Read more about early retirement at Akademikerne
  • Free assets, free funds and equity investments

Remember that the pension schemes are structured differently, and the payments can be planned so that they complement each other.

Pensionsinfo.dk gives you a comprehensive overview of all your pension schemes. Please note that some schemes may be excluded from the overview.

We recommend that you form an overview of your pension and that you contact your bank and pension company to be sure that there is nothing in the pension that will come as a negative surprise when you have to start the payouts. It is never too late to start making payments or optimizing your pension.