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Fire in Sweden

Question

Hello. I am very intrigued by FIRE. However, when I see people’s amounts here and calculations and salary I am shocked. The bottom line is, people seem to earn so much!

$100k+, I see it unlikely unless someone gets a management position that someone would get close to this salary in Sweden.

How come that the salaries are so much lower here? And I know that Americans keep their own health insurance etc etc but sure that doesn’t cover all of the difference? I’ll be graduating with a master in photonics engineering in June and I expect to make 35k gross salary if I get a PhD student position and 45k gross salary if I start in the industry. Maybe after a few years someone inches towards 60+, but I see 100k as unlikely.

Am I estimating wrong and/or am I missing something? Seems like Investing savings monthly will take a whole career anyway to reach numbers required.

Is there anyone from Sweden here who can chip in with some opinions? Is it possible to fire in Sweden?

Answers

Someone answered:

Fellow scandinavian here…

Realistically the classic FIRE lifestyle discussed here is unobtainable for many scandinavians. Our social systems are not “built for that” and low salaries combined with high taxes does make it exceedingly hard to retire early. However…. there are positives…

Without knowing it – you are closer to LEANFIRE than you may know.

The main differences between the scandinavian systems and the american system is obviously that americans have more direct control of their income where ours is socialized. That in effect means that the higher a lifestyle you are aiming at, the harder it is to obtain. However the core social services makes lean fire much more easy to do.

Lets look at some numbers. In sweden healthcare is broadly “free” (well, paid over taxes). As an american mentioned – they could easily spend 500 usd a month on healthcare – I have friends who spend over 2000 a month – many factors come into this – but if we assume that over a lifespan of 80 years costs 300 dollars per person per month incl. All deductibles and care facilities when you grow old etc. Thats’s roughly 100.000 usd with payment rate of 3.6% you are “born with” in Sweden.

You can do the same math on pensions. Now the swedish model is a bit complex but as I read it, you get a minimum of 77k sek (8000 usd per year) when you reach retirement age. In Denmark for example this number is 12k usd/year. You could say that this is similar to having 200k USD @ 4% when you turn 64.

If you factor in the education costs and other subsidized state services, it’s not a bad deal.

Theoretically, you could probably leanfire in a low cost of living area in Sweden on savings of 200k usd. If you went off the grid, barebones. And unlike our american friends you’d be secured at age 64 financially and have zero worries about healthcare.

Now if you want to do fatfire or just comfortable fire, you are pretty much screwed. The combination of a weak SEK and high taxes (on having employees) results in a pretty low average disposeable income. My best recommendation is to be selfemployed. By saving in your company pre-tax you can (if your expenses are super low) actully build an OK sized savings in your company and slow pay that to yourself incrementally to stay in the lower tax brackets. You also have some different options on depreciation and savings in a swedish company that would help a lot when trying to FIRE.

The biggest issue for scandinavians – the way I see it – is that the pension, healthcare and school systems all require you actually live in the country. You only get these advantges if you stay. So making money and saving for then to move somewhere cheap – like you can do in the states is not really an option. If you want to do that you coule optimally keep a humble house or apartment in sweden, live there half of the year (summer – lol) and have a secondary residence somewhere warm and cheap for the other half of the year. Tons of scandinavins do this – typically in Spain, Greece, South East Asia, etc.

Someone answered:

Hi,
I'm a Swedish engineer, 29 years old. The concept of FIRE will work exactly the same for us as the Americans and it is definitely obtainable by us. We just have to consider some other costs and benefits than them. Stop comparing your salary to American engineers right away. Their 100k USD a year is pretty much unobtainable by us, but we dont need it. Our cost of living is WAY lower than theirs.

Just apply the basics of the trinity study and the fire concept: Take your yearly expenses, multiply by 25. BAM thats your FIRE number. Put all your savings in a index fund, for example avanza global, and remember that the number one way of reaching fire quickly is by lowering your expenses. In my case, I live in a medium sized apartment (renting) and I only use my bicycle for transport. I have a monthly salary of 44k SEK gross and I can easily put away 12k+ SEK per month into my investment account. My expenses right now are about 15k per month. if I take that yearly it is 15k times 12 = 180k, and then multply by 25: 180k times 25 = 4,5 million SEK. And thats my fire number. 4,5 million sek is easily obtained if you can keep adding to your investments each month and letting the index fund work for you.

Good luck on your journey!

EDIT This is completely disregarding our pensions since I expect to retire way before 65. At 65 we will then get the pension and it will be even easier. I just dont put in my calculations to keep things simpler and be on the safe side.

Someone answered:

If you want American salaries you need to take American risk. I’m in the Netherlands and switched to becoming a freelancer. That meant saying goodbye to all the social and welfare plans. No more safety net. But I was able to go from €60k salaried to €160k freelancing doing the exact same job, same amount of time off, with two hours a month spent on administration. Net income is €100k.

I don’t have paid sick days, no paid holidays, no unemployment, no disability and I have to buy my own laptop/company car. But at least I can easily built wealth on this income. Expenses are €20k a year.