The same debate may have led others to discover the exact size of the payments they can expect to receive as pensioners. As income levels rise, many will want to set aside more of their income for consumption later in life. In addition, today’s working population expects to live longer than previous generations, but also to be more active and in better shape than they were. Many people will therefore want to have more capital at their disposal as pensioners than public pension schemes can provide. Another reason to save is to have something put by to meet emergencies. In Norway, the tradition used to be to hide away some extra “daler” in savings in the bottom of a trunk. These emergencies are also to a greater extent now covered by public schemes such as unemployment benefit and disability pensions. At the same time, private schemes are becoming more common. Let us now look at how households save. Households save either in the form of fixed investment, mainly their own homes, or in the form of financial investments. This chart shows how households distribute their total wealth. The value of housing wealth is very uncertain. By our estimates, households’ total housing wealth was around NOK 2000 billion at the end of 2004. Housing wealth accounted for a little more than half of total gross household wealth at this time. The picture was about the same in the mid-1990s.
Households that save in banks or invest in other forms of financial assets make funds available to others. Banks convert some households’ savings into loans for other households wishing to finance house purchases, for instance. If we look at the household sector as a whole, savings accounted for about five per cent of household disposable income in 2004,1 which has been the level of saving for the past few years. These are funds that are channelled to the business sector in Norway or abroad to finance investment there. There may be various reasons behind a decision to save. In many cases, the objective is to spread consumption evenly through the course of a lifetime. Another reason may be the desire to leave behind an inheritance. For most people, the level of income will fluctuate through life. Most of our income is earned while we are economically active. Once our working career is over, we will have little to live on if we have not set aside capital as we earn or have secured our retirement by some other means. A hundred years ago, a common way of “saving” for old age was to have a large number of children. A large family increased the probability of some of the children growing up and being able to support their parents when they were old. By looking after family property, and perhaps expanding it, subsequent generations could also be provided for.