The government said it was seeking to address imbalances brought about by pension reforms started in 2006 that increased the retirement age to 67, promising to pay for the reform by higher taxes on banks, wealthy individuals and others.
The right to early retirement would apply to people aged 61 or more who have spent between 42 and 44 years in the labour market - a category the government expects to include about 38,000 people by 2022.
"We are addressing great injustice on our labour market," Prime Minister Mette Frederiksen told a press conference.
The minority government still needs to negotiate with other political parties on the reform which would cost 3 billion Danish crowns ($480 million) a year.
Half of that bill would be financed by extra taxes on the financial sector and the other half by taxing property investors and rich individuals, the government has said, without giving any more details.
($1 = 6.2556 Danish crowns)
(Reporting by Jacob Gronholt-Pedersen; Editing by David Holmes)
By Jacob Gronholt-Pedersen