Winter time: An extra hour is all it takes to build a better future
On Sunday, 26 October, you’ll gain an extra hour as the clocks are set back – why not use it to secure your future? Our private economist, Camilla Schjølin Poulsen, guides you through ten essential questions that can help you optimise your savings and insurance for the benefit of both you and your family.
1. Are you saving enough?
On My PFA, you can view your Pensions Estimate, which provides an indication of how much money you’ll have as a retiree. We recommend aiming for a figure around 80, meaning you could expect to have 80 per cent of your current net salary for 22 years after reaching state retirement age. Remember, even small amounts grow significantly over time, giving you financial freedom in the future. For instance, if you can spare DKK 500 per month after tax, you could have approximately DKK 300,000 extra in your pension savings after 20 years, after costs and pension yield tax. Check your Pensions Estimate on My PFA.
2. Should you secure a tax deduction this year?
From the start of the new year, a completely new tax system will be introduced, including both medium-bracket tax and top-top tax. This means that many people could benefit from boosting their pension before the New Year’s bells ring. Read more on PFA.dk if you’re curious: Do you pay top-bracket tax? Here’s a good tip – but use it before New Year.
3. Are you and your loved ones properly covered if the worst happens?
A good pension also provides cover in the event of illness or death. If you have children and a spouse or domestic partner who depend on your income, your insurance cover can help ease a difficult situation for your family. By spending just five minutes using the Insurance Guide on My PFA, you can ensure that you are neither underinsured nor paying for cover you don’t need.
4. Are you contributing to old age savings?
If your current annual gross income is below DKK 600,000, you should consider contributing to old age savings – even if it means contributing slightly less to your instalment insurance or lifelong annuity. Old age savings can provide you with more money in retirement because they don’t reduce your state pension. Additionally, they offer greater flexibility as you decide the pace of payouts. If you want to contribute to old age savings, send us a message via My PFA.
5. Have you considered your investments?
Your investment choice is crucial and should align with your preferences and risk tolerance. A high proportion of equities is expected to provide a significantly higher return over time but also comes with greater risk of fluctuations along the way. You can get help choosing by spending two minutes on PFA’s Investment Guide on My PFA. The guide also allows you to allocate a portion of your contributions to PFA Climate Plus, where PFA places extra emphasis on climate considerations.
6. Who should receive payouts from your pension and life insurance?
Normally, next of kin will receive the funds if something happens to you. This is typically a spouse or domestic partner – even if you have children. However, you can make your own choice, so make your decision on My PFA to ensure the right people receive your money.
7. Is your pension prepared for divorce?
Divorce statistics show that, unfortunately, it’s not just something that happens to others. If you have less in pension savings than your partner, you could face significant challenges after a divorce. As a rule, each partner keeps their own pension savings when leaving the relationship. A good tip is to seek legal advice to create a prenuptial agreement or cohabitation contract that ensures a more balanced outcome for both of you.
8. Can you reduce costs?
If you have pensions scattered across different providers that you no longer contribute to, it’s worth checking whether consolidating them would be beneficial. This can often save you annual fees and provide better oversight. On My PFA, you can retrieve information from Pensionsinfo.dk to get an overview of your savings and the providers they’re with. You can also always reach out to us if you’d like assistance. If the benefits outweigh the drawbacks for you, we’ll help you get everything sorted.
9. Are you using your health insurance when your health is struggling?
It’s easier to prevent than to cure. If you have PFA Health Insurance, don’t hesitate to use it. Through My PFA, you can easily and quickly book an appointment with, for example, a chiropractor or physiotherapist. Many services can also be accessed from home or work, as PFA offers online consultations with doctors, physiotherapists, family coaches and psychologists. Get an overview of your options on pfa.dk: How to get help.
10. Are you considering retirement?
As retirement approaches, there are many financial and personal decisions to make. The content hub on pfa.dk, Are you considering retirement?, explores the most important aspects to consider when planning your retirement. It provides valuable insights to help you plan your transition, ensure financial stability and make the most of your retirement years. Find out more here: Are you considering retirement?