Eleven things an entrepreneur needs to know when retirement approaches
If you can see retirement on the horizon, it's time to start preparing. As an entrepreneur, it may be necessary to start preparing for pension years in advance. If you’re retiring in Finland, keep the following eleven things in mind when you start planning for retirement.
1. Check your retirement age
Old-age pension age is what we call the age at which you can retire on old-age pension. It varies for all of us since it is tied to the year of birth and gradually rises. For example, like this:
Year of birth
Old-age pension age
64 years 6 months
64 years 9 months
As our customer, you can check your retirement age in the MyPension service. Please note that the service is currently only available in Finnish and in Swedish.
2. Is partial old-age pension for you?
If your retirement age seems too far away, a partial early old-age pension may be for you. It allows you to reduce your workload even before old-age pension. Currently, partial old-age pension becomes available at the age of 61. However, the age limit for this partial pension is also determined by the year of birth. The age limit changes for those born in 1964 who qualify for partial old-age pension at the age of 62.
Read about partial old-age pension »
3. What kind of standard of living do you want in retirement?
The later you retire, the larger your pension. You can continue working even after you reach retirement age. And if you continue to work, you will accrue additional pension — until you reach your upper old-age pension age, which is currently 68. As our customer, you can calculate the size of your pension with different age options in the MyPension service. You can calculate how much your pension would increase if you kept working past your retirement age. Or how about working part-time while on partial old-age pension? Compare different calculations and decide what amount of pension is right for you.
4. Try life as a pensioner
How much of your pension will go to housing costs? Will you have any debt to pay off after retiring? How well can you anticipate changes in your finances? Once you know the amount of your future pension, try living off that amount for a couple of months.
5. What happens to your business?
Are you a self-employed person with no employees? Or are you also an employer? If you are an employing entrepreneur, you will have to start planning for retirement early, preferably years in advance. You will have to solve a big question regarding the future of your business: Will you sell, hand over to the next generation or end your business altogether?
Read about the impact of business changes on YEL insurance »
6. Apply for pension
Once the decision to retire has been made, apply for pension. As our customer, you can easily do that in the MyPension service. You should submit your application roughly one month before you’re planning to retire. Filling in the application takes about 15 minutes, and you might even get the decision the same say.
Remember these things about applying for old-age pension:
- Old-age pension always starts at the beginning of the month, not in the middle. Your pension can therefore start no earlier than the beginning of the following month after you have reached your retirement age.
- You don't have to stop your entrepreneurial activities to get old-age pension.
- If you have done other work in Finland before your entrepreneurship, you can apply for the pension accrued from that work with the same application – regardless of whether the work was done in the private or public sector.
- State in the application if you are also applying for Kela's national or guarantee pension. Read more about Kela's pensions on their website (kela.fi) »
- If you have also accrued pension abroad, see the next section for detailed instructions.
When we receive your application for old-age pension, we will terminate your YEL insurance automatically. If you apply for partial old-age pension, we will not terminate your YEL insurance. In this case, make sure that your YEL income corresponds to your work input during your partial old-age pension. You can easily apply for a change in your YEL income in our online service.
7. Apply for pension from abroad
If you have also accrued pension in some other country, remember to apply for that pension as well.
- Applying from an EU or EEA country, Great Britain, Switzerland or a social security agreement country: fill in a Finnish pension application in the MyPension service and state in your application the country from which and the date as of which you are applying for a foreign pension and provide the necessary information on your residence and employment abroad.
- Applying from somewhere else: you must take care of applying for the pension from the country in question yourself. Your pension might not be paid to Finland, but this should be looked into on a case-by-case basis.
You can find more detailed information about applying for pension from abroad here »
8. Apply for a new tax card
Pension is taxed differently than paid employment, so you will need a new tax card. Simply order a new tax card from the tax authority, and it will be transferred to us electronically — you don't have to mail it forward.
Read more about the taxation of pension here »
9. Make the most out of pensioner discounts
We will automatically send you an earnings-related pension card within about two weeks of issuing the pension decision. The card entitles you to discounts for example from VR, Matkahuolto, and many cultural services. Those on old-age pension and permanent disability pension are eligible for the card, while those enjoying a partial old-age pension will not receive the card.
Read more about the earnings-related pension card »
10. Enjoy retirement and take care of yourself
The retirement days you’ve earned with hard work are finally here – enjoy! As a pensioner, fluctuations in global economic stock prices or other world events won't affect your pension. It shows up on your account always on the first business day of the month. So, you don't have to worry about your pension, but take extra good care of yourself!
11. Or would you still like to work after all?
If you have more to give to the working life, you can continue to work alongside your pension – as an entrepreneur or employee.
- If you decide to continue working as an entrepreneur while on an old-age pension, pension insurance is voluntary. You can take out voluntary YEL insurance and accumulate additional pension up to your upper old-age pension age. Read more about working as self-employed while on retirement »
- Working as an employee while on pension, you keep accruing more pension until your upper old-age pension age. The upper age limit is determined by your year of birth, for example for those born in 1958 the age is 69. Read more about working while on pension »
+1. When is a good time to retire?
Did you know that there will be a record-high increase in pensions in 2023? Inflation affects the index increase in pensions, which can in turn affect when it makes sense to retire. Read more here: Record-high increase in pensions in 2023 – when to retire?
YEL income reviews will start this summer
The YEL reform entered into force in the beginning of the year. Pension companies are now obligated to check entrepreneurs' YEL incomes at steady intervals. We will start the reviews this summer – here’s what you need to know about it.
YEL reform enters into force at the start of next year
The Self-Employed Persons’ Pensions Act will change at the start of the year: YEL income will be determined in more detail and adjusted more often. “Self-employed persons deserve the same level of pension and social security as employees. The reform will help achieve this,” says Minna Hakkarainen, Ilmarinen’s Director, Insurance Services.
Most frequently asked questions on the YEL reform
What questions are self-employed persons asking about the Self-Employed Persons’ Pensions Act (YEL) reform? We assembled all of the questions most frequently asked by self-employed persons. The expert for the article is Ilmarinen’s Director, Insurance Services, Minna Hakkarainen.