The occupational pension giant Alecta has, with income data (2021) from Statistics Norway, among other things, analyzed how the economy looks for the cohort born in 1954.
It has compared their total income at age 67 with what they had in their wallets at 60.
It is therefore not just about the general pension, but also about occupational pensions, private savings, various transfers (subsidies), capital income and earned income, net after tax.
Some conclusions that stand out:
The average earner then had after tax 90 percent of the income at 67 compared to seven years earlier. High income earners end up at the same level: 90 percent.
Low-income earners had a higher income at 67 – 116 percent compared to the income at 60.
“Feeling better than many people think”
Alecta believes that the constant talk of poor pensioners is misleading.
– It is always important to say that it is clear that there are elderly people who have very low incomes, and that attention needs to be paid to this.
– But the typical pensioner is actually a little better off than many people think, says Staffan Ström, pension economist at Alecta.
The 67-year-old has SEK 70,000 more a year to move around with compared to 67-year-olds 12 years ago (in today’s money value). And the 70-year-old has SEK 44,000 more, according to Alecta’s calculation.
What will the economy be like when you retire? Better than many people think, claims Alecta in a new study.
Photo: JENNIFER GLANS / Pensions Authority
The fact that the income of the average newly retired person is so high can have several reasons. Some still have one foot in professional life and still have earned income – with lower tax from 66 on top of that.
Something else that affects is the withdrawal of the occupational pension. If you pick it out in the shortest time, you can get five good years between 65 and 70. Then it gets worse, but still not that bad according to Alecta. At 72, the average Swede has 77 percent of the income at 60.
That’s how they calculated
At age 67, the typical middle-income earner has a public pension equivalent to 51 percent of income at 60.
If you add the occupational pension, the figure rises to 79 percent.
If you add other types of income, for example from private pension savings or work income, the total figure is 87 percent (90 percent after tax).
Source: Alecta
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– Even if we look at the age of 72, 3 out of 10 Swedes still have a higher income then than when they were 60, states Staffan Ström.
Alecta will return to what it looks like for the elderly over 80 in the next study, it is stated.
Low-income earners fared better
The fact that low-income earners received more money at 67 than at 60 is primarily due to the fact that the contributions are more generous for those who retired with a small income.
The basic protections are thus stronger in the pension system than those that exist earlier in life.
– Many of those who had very low incomes earlier in life receive a guaranteed pension, and at least those who are single also often receive a housing supplement, notes Ström.
Staffan Ström is a pension economist at occupational pension company Alecta.
Foto: Evelina Carborn
At the same time, there are more and more people who have worked and toiled all their lives who cannot manage on their income pension. In 2024, almost 60 percent of Sweden’s pensioners will receive some part of the guaranteed pension, that is, part of the basic protection.
A fact that possibly rubs a bit against Alecta’s conclusions.
– The positive numbers that we see in this study do not mean that there are not people who are having a tough time, says Staffan Ström and continues:
– But we want to nuance the debate and show that it is not the case that you become poor by becoming a pensioner. Poverty exists at all ages.
According to the study, poverty is more common among the young (17 percent) and middle-aged (13 percent) than among the elderly (12 percent).
– If you are to find groups where poverty is really widespread, it is actually not primarily among pensioners, but, for example, among single parents and those born abroad, claims Ström.
The seniors: Strange comparison
Anna Eriksson, an expert on pensions at SPF Seniors, is however critical of Alecta’s way of calculating.
– We think it will be a strange comparison. If you add other income to the pension, if it is necessary to increase the income, then it is proof that the pensions are not enough.
– It also risks distorting the important debate about pensions.
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