Susanne Lundin’s dream was to retire early and reduce her work hours by the age of 62: enjoying leisurely days, some travel, and time with her children and grandchildren, combined with her job as an administrator and receptionist at Södersjukhuset in Stockholm.
And indeed, it has been a wonderful time in life as a working retiree, just as Susanne had hoped, but the cost of newfound freedom and much-needed rest came as a surprise.
“I started taking out my public pension at 62. It has cost me 3,000 kronor less in pension per month, for life,” she notes.
Occupational pension provides extra room
But with that said, the sweetness of freedom and leisure days does not disappear, assures Susanne, who has come to SPP’s party for the 2024 retirees, right in the middle of Stureplan in Stockholm. Even though the decision has cost her, it was necessary for her.
“And it’s so nice not to work 100 percent as I thought. Thanks to my occupational pension, I have room to have some fun and travel a bit. The occupational pension is the savior. I have lived as a single mother with three children, and there was no room for pension savings. So, I haven’t had any private pension savings,” she says.
Susanne is 66 years old. She began her retirement journey by reducing her working hours to 80 percent, then 70 percent, and now she works 50 percent. By the summer of 2025, she will check out from her workplace at Södersjukhuset for good.
“It will be so wonderful! I don’t understand how I had time to work; I fill my time with walks with neighbors and time with friends. And I travel.”
In hindsight, Susanne wishes she had spent time on pension planning earlier and sought advice regarding the decision to start taking out her pension before the target age.
“With help, I might have been able to do something different.”
Advantages of working longer
The timing of retirement is an important factor to consider for those planning their pension. Many choose to synchronize their retirement with their older partner to enjoy free time together, but it costs a significant amount for the younger person in the relationship. According to statistics from Statistics Sweden (2022), the age difference between Swedish married opposite-sex couples is on average 2.5 years.
In 68 percent of cases, the woman is the youngest.
If the younger partner has also had a lower salary during their working life, the difference in pension level becomes greater. It would instead benefit the younger partner to work longer to achieve a more equal pension with their partner. Additionally, a person who retires at 62 generally has higher taxes on their pension compared to someone who waits until 67 or older. This is because older retirees receive benefits such as an increased basic deduction and higher earned income tax credit.
New rules for occupational pension in 2025
Susanne has chosen to take out her occupational pension over 5 years. But after the turn of the year, she and others will have the chance to reconsider, extend, and even pause their payments to make the money last longer.
Previously, it has not been possible to change the payment choice of occupational pension retrospectively. But from January 1, 2025, many will have the opportunity to pause an ongoing payment of occupational pension during the first five years. This is something Susanne will take advantage of.
Read more about what applies to you as a pension saver with SPP.
“I will use the new rules to maintain a higher standard for more years,” says Susanne.
