Through Statistics Sweden, I have obtained information on how much the Swedish households save, or rather how large their savings ratio is.
For you and me who save and invest our money, savings ratio is an interesting metric. It is stated as a percentage and is the money you save divided by your net income. An example that gives a saving ratio of 10% is if you save USD 2,000 a month if you have a net income of USD 20,000.
The data I have obtained from Statistics Sweden looks at “financial savings ratio” which means savings in shares, funds, and savings account. It turns out that in Sweden we save more than we ever did. If you deduct pension deposits, we are currently at an average savings ratio of 5.5%.
When it comes to financial data, I’m not a huge fan of average because it can be quite misleading. There are certainly many who do not save at all and even those who save much more than 5.5%.
How many saves and how much?
If you then look at Good Finance (those who have their investments with Good Finance), Good Finance published statistics on how much their customers save per month. Most of them are between USD 100-1000 a month, which may be a good match with Statistics Sweden’s figures that the savings ratio is 5.5%.
Is 5.5% in savings ratio?
It is difficult to advise others how much is a reasonable savings ratio. Personally, I think 5.5% is just too little. Most banks recommend that you save 10% of your salary and this is mainly because you will receive a pension without having to reduce your standard of living too much. Between 10-20% is perhaps a level that can give you a little extra as a pensioner and if you want to be able to quit your job earlier, you need a savings ratio of over 20%.
There is an exciting calculator on Networthify where I produced below graph based on 20% savings ratio and a return on your capital of 8%. You can go in and count on your savings yourself and change the numbers a bit. With 20% savings ratio and 8% return as assumptions, it takes about 30 years to save up a capital that you can live on.
All in all, it can be said that most Swedes probably save too little to be able to receive a pension that means the same standard of living as when they work. The proportion that saves enough to get a really good pension is even smaller. If you want to get started and save more to be able to quit working earlier, it is possible for most of us.
For example, start with a cash register and find out where you spend your money and see if you can remove unnecessary expenses. Perhaps the most important tip for those who are not yet saving is to start today. The best savings are what gets lost and it doesn’t matter if you start with USD 100 / month. Let time do its thing and the money will grow!