What do you withdraw, and when? The optimal withdrawal order in retirement
Most people plan the saving, not the spending. The order can cost — or save — hundreds of thousands
The withdrawal order in retirement often decides whether you fall into the Danish pension supplement trap. How to manage ratepension, taxable account, stock savings account and aldersopsparing to keep the most after tax.
Two retirees with exactly the same savings can end up with very different finances — not because of returns, but because of the order in which they take the money out.
Most people spend decades thinking about where to save and which accounts are the most tax-efficient. Almost no one makes a plan for how the money should come back out. And that is a shame, because the withdrawal order can mean hundreds of thousands of kroner over a retirement — mainly because it decides whether you fall into the pension supplement trap or not.
The three kinds of pension income
To manage the order, it helps to see your income sources as three categories, ranked by how much control you have over the timing.
Fixed income you cannot move around. The basic state pension (folkepension), ATP (Arbejdsmarkedets Tillægspension — the statutory supplementary pension almost all employees have paid into) and a lifelong annuity (livrente) arrive when they arrive, in the size they are. You can defer the state pension, but otherwise there is little to manage.
Scheduled income you have some control over. A ratepension (instalment pension) is paid out over a period you choose within the legal limits: at least 10 years, and fully paid out no later than 30 years after your pension payout age. (The limit was raised from 25 to 30 years with the 2025 pension agreement.) The payout age is typically 3 years before state pension age for schemes set up from 2018. Choosing between 10 and 30 years does not change the total sum — but it changes the annual payout substantially, and with it where you land relative to the pension supplement.
Flexible income you control the timing of yourself. A stock savings account (aktiesparekonto, ASK — an account with a low, flat mark-to-market tax of 17%), a taxable account (frit depot — ordinary share trading outside pension schemes) and an aldersopsparing (a pension account with no deduction, but also no tax at payout) can be drawn on exactly when it suits you. This is where the greatest room for management lies.
The point of the split: the further down the list, the more you can use the source as an adjustment dial to land on the income that leaves you the most after tax.
The pension supplement as a lever
The reason the order matters at all is the pension supplement (pensionstillæg) — the income-dependent top-up to the state pension, of which a single retiree can receive up to DKK 104,748 per year (2026). The supplement is reduced when your “other income” — everything beyond the basic state pension — exceeds a threshold.
For single retirees in 2026 the staircase looks like this:
| Other income | Pension supplement |
|---|---|
| Below DKK 99,200/year | Full supplement (DKK 104,748/year) |
| DKK 99,200 – 438,200/year | Reduced by 30.9% of the excess |
| Above DKK 438,200/year | Phased out entirely |
In the zone between the two thresholds the effective marginal rate is around 56–67%, because you pay both ordinary income tax and lose supplement. The mechanics — and an interactive curve showing what the zone costs — are covered in detail in the article on the pension supplement trap.
What matters for the withdrawal order is what counts towards the DKK 99,200:
| Source | Counts in the pension supplement calculation? |
|---|---|
| Ratepension, life annuity, ATP | Yes, in full |
| Positive net capital income (interest) | Yes |
| Capital gains from a taxable account | Yes, in full |
| Stock dividends above DKK 5,000 (allowance) | Yes |
| Returns from the stock savings account | No |
| Returns from aldersopsparing | No |
That gives two workable strategies. Either you keep total other income below DKK 99,200 and keep the whole supplement. Or your savings are large enough that you land clearly above DKK 438,200 anyway, where the supplement is long gone and the marginal rate is back to normal. The expensive place is the middle. The whole art of the withdrawal order is to avoid parking in the zone longer than necessary.
A concrete example: Pia, aged 67
Pia is single and has just started her state pension. She has:
| Fixed income | Amount/year |
|---|---|
| Folkepension basic amount | DKK 90,528 |
| ATP | DKK 17,340 |
| Pension supplement (full, if below the threshold) | DKK 104,748 |
| Savings | Value |
|---|---|
| Ratepension | DKK 1,200,000 |
| Taxable account | DKK 1,000,000 (of which approx. DKK 400,000 is unrealised gain) |
She needs to supplement the state pension by around DKK 130,000 a year to live the way she would like. The question is how she takes that money out.
Note her starting point: ATP already fills DKK 17,340 of the DKK 99,200 before she has even touched her savings. So she has roughly DKK 81,860 of “headroom” before the reduction kicks in.
Scenario A — the naive order
Pia does the intuitive thing: she takes the ratepension first and over the shortest period, 10 years, to get it “over with”. That gives DKK 120,000 a year.
Other income becomes 120,000 + 17,340 = DKK 137,340 — that is, DKK 38,140 inside the reduction zone.
- Lost pension supplement: 38,140 × 30.9% = DKK 11,785 a year, for 10 years.
- When the ratepension is used up (Pia is 77), her income drops sharply and she has to sell from the taxable account to live. The realised capital gains count as stock income — so in those years she pushes herself back into the zone.
Over the first 10 years alone, the reduced supplement costs about DKK 118,000. On top comes the loss in the later years, where the taxable account is realised aggressively.
Scenario B — the optimised order
Pia instead stretches the ratepension over 25 years. That gives DKK 48,000 a year.
Other income from ratepension + ATP becomes 48,000 + 17,340 = DKK 65,340 — below the threshold.
She covers the rest of her consumption (approx. DKK 65,000/year) from the taxable account. Because only the gain portion of a sale counts, and the gain makes up about 40% of the account, a sale of DKK 65,000 corresponds to a capital gain of about DKK 26,000. Total other income: 65,340 + 26,000 = DKK 91,340 — still below DKK 99,200.
Result: full pension supplement preserved every year. Lost supplement: DKK 0.
The difference
| Scenario A (naive) | Scenario B (optimised) | |
|---|---|---|
| Ratepension paid out over | 10 years | 25 years |
| Other income, typical year | DKK 137,340 | DKK 91,340 |
| Lost pension supplement per year | approx. DKK 11,785 | DKK 0 |
| Lost supplement, first 10 years | approx. DKK 118,000 | DKK 0 |
On the pension supplement alone the difference is a good DKK 100,000 — and once you add the aggressive taxable-account realisations in Pia’s 70s, plus the inheritance advantage of leaving a larger taxable account (more on that below), the gap runs into several hundred thousand kroner over a 20-year retirement.
Note that Scenario B does not require Pia to spend less. She spends the same. She just takes it out in an order that does not trigger the penalty.
What do you leave to your heirs?
The withdrawal order is not only about your own finances, but also about what is left — and how it is taxed when it passes on.
Here the taxable account has an advantage that surprises many people. Unrealised stock gains in a taxable account are generally not taxed at death. In a tax-exempt estate (skattefrit dødsbo) — which most estates are, because the 2026 threshold is an estate value and net worth of DKK 3,563,100 each — the heir takes over the shares at the market value on the cut-off date as their new cost basis. The gain that arose while the deceased held the shares is never taxed with stock income tax.
The heir pays inheritance tax (boafgift) on what is inherited (15% for close heirs, e.g. children, on the value above an allowance of DKK 392,300 in 2026), but not the 27–42% stock income tax the gain would otherwise have triggered on a sale during the owner’s lifetime. If the estate is set to exceed the DKK 3.56 million threshold, it becomes a taxable estate, and then gains can be taxed in the estate — but that affects a minority of estates.
The consequence for the order: if you have the choice between drawing down a taxable account with large unrealised gains or drawing on other funds, it can — all else equal — be an advantage to leave the taxable account alone and instead use ratepension, aldersopsparing and the stock savings account first. Pension accounts do not have the same tax-free generational transfer: a ratepension is paid out to the estate or beneficiaries with a charge, and an aldersopsparing is inherited without the large advantage the taxable account has here.
This pulls in the opposite direction of the pension supplement concern, which often argues for using the taxable account early to avoid large realisations later. The two concerns have to be weighed in the specific case — there is no single right answer for everyone.
The home belongs in the same consideration. Via the parcelhusreglen, a house is also a tax-efficient asset to leave behind: the increase in value that occurred while you lived in it generally passes on without gains tax. Whether you should stay put, sell and rent, or move to something smaller, we work through in Own, rent or invest.
Stock savings account vs. taxable account in retirement
In the savings phase, the stock savings account is often the obvious choice because of the low 17% mark-to-market tax. In the withdrawal phase the picture becomes more nuanced, because the two accounts behave differently on two axes: pension supplement and inheritance.
The stock savings account is pension-supplement-friendly. Neither capital gains nor dividends from an ASK count in the pension supplement calculation. That makes it the ideal source to draw on in the years where you sit just below the reduction threshold and cannot afford a realised gain to push you over.
The taxable account is inheritance-friendly. As described above, the taxable account benefits from the tax-free generational transfer, whereas the stock savings account does not have the same advantage — at death an ASK is typically wound up and the returns taxed up to closure.
A rough guide for retirement:
- Are you in or near the reduction zone and need to realise a gain this year: take it from the stock savings account (it does not count).
- Do you have plenty of distance to the threshold and want to leave as much as possible to heirs: leave the taxable account alone and use other sources.
- Do you need a large lump sum (a new roof, a car): consider the aldersopsparing, which neither triggers tax at payout nor counts in the pension supplement.
There is no universal ranking. The right source in a given year depends on how close you are to the DKK 99,200, how large the unrealised gains in each account are, and how much you weigh inheritance against your own disposable income.
Getting the overview: Portfolio Manager and Pensionsinfo
A withdrawal plan requires two kinds of numbers most people have never gathered in one place: what you expect in pension payouts, and what your free savings are worth and hold in unrealised gains.
For the pension side, Pensionsinfo.dk is the starting point. It collects your schemes across pension providers and shows the expected payouts — the numbers you need to hold up against the pension supplement’s thresholds when you plan the ratepension’s payout period. Note that the site is in Danish.
For the investment side, Portfolio Manager is a Danish tool that gathers your accounts in one picture — stock savings account, taxable account, certain pension accounts and more — with correct average cost basis (GAK) and Danish taxes built in. It gives you what you need to assess how large a gain portion a sale from the taxable account actually triggers — that is, how much of a sale counts towards the pension supplement.
Today the tool shows your assets and returns after tax, but it does not yet calculate the optimal withdrawal order or the pension supplement effect itself — that requires knowing your actual pension payouts from Pensionsinfo. So it delivers one half of the overview; the comparison with the pension payouts is, for now, still yours to make.
The withdrawal order is the last piece of a larger plan. To see it in the context of the state pension, account choice and savings order, start with the complete guide to pension saving.
This article explains the rules and the mechanics — not what you personally should do. The rates apply to 2026 and are adjusted over time, and your situation depends on your specific income, schemes, pension age and inheritance wishes. Consider talking to an independent pension adviser before settling on a withdrawal plan or moving larger amounts.