One way to extend the pension and ensure that the wallet remains more well-filled is to continue for a while longer in working life. Becoming a job holder has become increasingly popular in recent years.
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263,000 pensioners continue to work
In 2022, there were a whopping 263,000 job holders aged 62 to 84 in Sweden, according to the Pensions Authority’s statistics. Of those who continue to work, the vast majority are aged 66, 67 and 68 respectively.
In addition to continuing to receive a salary, continued work also contributes to increasing the pension in the long run.
The Swedish Pensions Authority states that research shows positive effects of reducing working hours, above all it has shown good health effects, rather than abrupt retirement. And despite the fact that not everyone has the opportunity to continue working after reaching a certain age, the authority’s survey shows that a great many people find it partly fun and that they feel good about being able to work for a couple more years.
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Photo: Pontus Lundahl/TT
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“For those of you who have a salary that exceeds SEK 47,625 per month (2024), part-time work can have a greater negative effect on the occupational pension. It is important that you contact your occupational pension company to find out how part-time affects you,” the authority writes on its website.
Source: The Pensions Authority
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Photo: Pontus Lundahl/TT How does it pay to be a job seeker?
You often hear that it pays to keep working, so the reasonable follow-up question to ask yourself is: how and in what way does it pay to be a job seeker?
Photo: Henrik Montgomery/TT
If you have the opportunity and choose to continue working, for example, part-time work in combination with drawing a pension can give you an even higher pension compared to fully retiring and living on the pension payments. The reason for this is that you continue to earn money for the pension the longer you work, which means that the “pension buffer” increases and gives you more money every month, in addition to the salary payment.
Although the pension thus increases, the salary you earn will be the big financial advantage for you, rather than the increased income-based pension.
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Then the pension can increase by eight percent
If you instead continued to work full-time and postponed the pension drawdown entirely for a year, then it would have led to a pension increase of around six to eight percent, according to the Swedish Pensions Agency.
The average public pension in Sweden is SEK 15,600 in 2024. Should you continue to work and not draw any pension for a year, the pension can increase by SEK 1,248, provided that the pension increase is eight percent.
Important to remember when it comes to being a job bonus is that you get a higher employment tax deduction and basic deduction from January of the year you turn 67, and then refers to those born between 1957 and 1959. If you were instead born in 1960, then it from January of the year you will turn 68.
“This means that you pay lower tax both on salary and on pension from that year. The lower tax can, for example, be used to downsize and work part-time without the income after tax necessarily needing to decrease that much,” writes the Pensions Authority on its homepage and continues:
“Both salary and pension paid before your 67th year of life are therefore taxed higher than salary and pension paid from January of the year you turn 67, for those born in 1960 the 68th year of life applies”.
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