02-04-2024 09:54

Young people need to save more to maintain their lifestyle later on

Young Swedes are leading the way in investing in funds for the future. However, for both them and other young people in the Nordics, much more is needed to maintain their standard of living after retiring.
Young woman on way to lake with friends

“The saving patterns in the Nordics are interesting, but one thing is clear - no matter what part of the Nordics you live in, you need to save much more, earlier in life, to maintain your standard of living later on”, says Johan Nystedt, newly appointed head of Savings Growth at Nordea.

In his new role, Johan Nystedt will work to identify how Nordea can better serve customers’ savings needs, thereby enabling customers to reach their financial goals. In doing so, it is important to understand the complexity of savings patterns in the Nordics, a theme that Nordea constantly revisits.

The Nordics are wealthy 

The Nordic countries* are among the wealthiest in all Europe. According to Statista Research Department, the average annual earnings in the region now exceeds 40 thousand euro. For example, although Sweden and Finland “only” have 35,000 and 33,000 euro in average annual earnings, these figures still significantly exceed the EU average. 


“If you can afford it, you should definitely prioritise achieving your saving targets.  It doesn’t have to be that difficult. It´s better to save a little on a regular basis than not to save anything at all

Johan Nystedt, Head of Savings Growth at Nordea.

Big differences in fund saving patterns in the Nordics

Despite similar high average earnings, there are significant differences in savings behaviour between the Nordic countries. In Finland, a common method of increasing your wealth involves amortisation of home loans.  In Sweden however, 76% of the population choose to invest in funds. In comparison, around half of Norwegians, a third of Finns, and only 19 percent of Danes hold funds privately. 

“This data reflects the fact that Sweden has had a clear political incentive going way back to the eighties to subsidise savings, to help the Swedes invest more. It´s also interesting to see that Danes, who have the largest average fortune, don´t seem to put more of their money into funds”, says Johan Nystedt.

Young people save too little

Focusing on young people, data shows that this age group save, on average, much less than other groups and begin to save in funds too late in life. The advice from Johan Nystedt is to invest even the smallest amount and start saving each month early on in life. The so- called compound interest can make your savings grow exponentially over time.

“If you can afford it, you should definitely prioritise achieving your saving targets.  It doesn’t have to be that difficult. It´s better to save a little on a regular basis than not to save anything at all”.

According to Statistics Denmark, only around 20 per cent of Danes aged between 18 and 49 invested in financial products as of 2022. The numbers are almost the same for Finland according to data from Nordea Personal Banking in Finland. The data shows that among the younger age groups 18 per cent choose to save in investment products. 

Although Sweden and Norway have higher numbers, younger people in both countries still save in funds to a lesser extent than older people. According to our own fund database, roughly one third of young Swedes (aged between18 and 33) don´t save at all and a majority of Nordea customers below 40 years primarily hold their savings in cash.

“Starting a healthy savings behaviour early in life can be crucial to ensuring a comfortable retirement”, says Johan Nystedt.

*Iceland is not included in this review.

History of Mutual funds

Mutual funds manage nearly $20tn in US assets and about $63tn worldwide. The mutual fund concept was invented by Edward Leffler a former door-to-door salesman of pots and pans, who revolutionised financial markets. His invention, the open-ended mutual fund, allowed retail customers to buy into a diversified portfolio of stocks and be confident that they would get a fair value when they wanted their money back. Leffler’s innovation gave lower- and middle-class people an ownership stake in American capitalism.

Source: Financial Times

Pensions and savings
Private economy
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