Behind the Declining Savings Rate: An Analysis by Age Group and Income Bracket

ABSTRACT

The following conclusions regarding changes in Japan's savings rate were drawn from analyzing savings trends by income bracket and age group. The declining savings rate of recent years is not the result of all households saving less, but rather has been caused by those households in the 50s-60s age group who are in the lower income bracket, and households in the over-60 age group who are unemployed. The cause of this trend is a decrease in disposable income in recent years, which has not been accompanied by a comparable decrease in consumption. Falling interest rates stemming from the prolonged recession have greatly influenced the decrease in disposable income for the 50s-60s age group, as it has caused interest earnings to decline. Considering those households in the over-60s age group who are unemployed, it is not changes in the savings rate that should be viewed as the primary problem. Instead, it is the increase in the ratio of households in the unemployed upper age bracket-the demographic responsible for dragging down the savings rate-that should be viewed with wariness.