Norwegians over the age of 60 have become significantly richer in the last 10 years
Transitioning to a retirement pension usually means a decrease in income. Even so, Norwegian elderly continue to expand their wealth.
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In 2010, the households of elderly people had assets worth an average of 258,000 USD.
In 2020, this had increased to 476,000 USD, according to new figures from Statistics Norway (link in Norwegian).
The transition to retirement pension means that for the vast majority, income will decrease.
Despite this, the average older Norwegian is now so well off that they can continue to expand their wealth also as pensioners.
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Money in property and shares
Older people generally have far larger assets than younger people. But a lot depends on whether an elderly person owns their own home or not.
The market value of the homes of elderly people increased an average of 41 per cent from 2010 to 2020.
The elderly's financial capital has increased even more.
Measured in what is known as current NOK, it has, on average, doubled from 2010 to 2020.
Property assets and financial assets
Increased property values have contributed substantially to Norwegians' general increase in wealth in recent years.
The average value of a home in Norway is now around 397,000 USD. Well over half of Norwegians' wealth comes in the form of property.
When we talk about wealth, many people still think primarily of money in the bank and money invested in stock funds and shares.
Shares have also increased a lot in value in recent decades. And assets like these are very unequally distributed in the population. People's property assets are more evenly distributed.
Wealth increases substantially with age
If you own a home, it is referred to as physical capital.
Financial assets are money in the bank, or money in shares.
Together, this is referred to as wealth.
Statistics Norway researchers Jon Epland and Mads Ivar Kirkeberg established that Norwegians' wealth increases substantially with age in a study from a few years ago.
This did not come as a surprise.
However, until this study came along, it had been difficult to determine with relative certainty what people's homes were really worth. The real value of homes is indeed far higher than the assessed value known to the tax authorities.
And most of Norwegians' wealth lies, as mentioned, in their homes.
This also made it clear that many Norwegian households with low incomes – primarily the elderly – are sitting on significant assets.
When the researchers take people's real wealth into account, they find that significantly fewer Norwegians than previously thought are exposed to the risk of poverty.
From working to retired
The income of the elderly is mostly significantly reduced when they go from being employed to becoming pensioners.
A study (link in Norwegian) by Aurora Hattrem in Statistics Norway from 2022 nevertheless shows that the elderly do not begin to deplete their wealth after they have reached the age of 67, even though their income decreases significantly.
Even after the transition to retirement pensions, it seems that there is a significant build up of wealth among older Norwegians, the Statistics Norway researcher states.
Those with the lowest income increased their wealth the most
In her study, Hattrem looked at a total of just over 44,000 Norwegians born in 1944.
She found that during the last decade, it was especially those with the lowest incomes who increased their wealth. On average, they increased their wealth far more than those with the highest incomes.
This was mainly due to the strong increase in the value of their physical capital.
Norwegians born in 1944 have an average wealth of 297,000 USD, Hattrem found out.
By comparison, the average wealth of the entire adult population is 119,000 USD.
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Translated by Alette Bjordal Gjellesvik.
Read the Norwegian version of this article on forskning.no
References:
Aurora Hattrem. Mindre inntekter, men større formue for pensjonistene (Less income, but greater wealth for pensioners), Statistics Norway article, 10 January 2022
Jon Epland and Mads Ivar Kirkeberg. Wealth Distribution in Norway, Statistics Norway report 35/2012.
Tor Morten Normann. Økt formue og boligformue blant eldre (Increased wealth and property wealth among the elderly), Statistics Norway article, 6 December 2022
