Figure 5.4, the pattern is almost identical until age 55–59. After age 60, the saving
rates of the median household go down steadily.
As far as flow data in Figures 5.1–5.4 are concerned, no strong signs of
behavioral change after the burst of Japan’s bubble economy in the early 1990s are
found. In retrospect, the economic recession did not penetrate enough into the
daily life of the households in 1994. The worse came later, in 1997–98, when a
series of large bankruptcies occurred in various industries. We have to wait until
the 1999 NSFIE to examine the impacts of the economic recession in 1997–98.
5.4 SAVING RATES BY INCOME CLASS
The average saving rates in all households by quartile income class are shown in
Table 5.6 and Figures 5.6–5.9. Throughout the sample period, the poorest quarter
of the households (I) experiences negative saving rates usually in their sixties and
after, while the other quarters of the households (II–IV) keep positive saving rates
steadily over the life cycle.
To be more precise, for the second and third quarters of households (II–III), the age
profiles of saving rates are, more or less, hump shape over the age profile. For the richest
quarter (IV), the age profile of saving rates is somewhat different from those of the other
quarters. It keeps rising and ends with a very high rate (easily above 40%) over age 80.
TABLE 5.7 Age Profile of Homeownership Rate
Age 1979 1984 1989 1994
–24 20.8 20.6 15.9 17.0
25–29 33.0 29.5 27.1 21.7
30–34 47.5 48.9 45.0 38.3
35–39 64.1 66.1 64.6 59.1
40–44 71.4 76.7 76.5 73.5
45–49 79.1 82.9 83.2 81.4
50–54 83.9 85.3 85.6 85.3
55–59 85.5 90.4 89.1 86.1
60–64 85.7 89.0 91.3 89.9
65–69 85.2 88.1 90.4 89.9
70–74 88.2 90.3 90.4 90.3
75–79 87.3 89.2 86.9 87.6
80þ 80.0 88.5 88.0 87.0
Average 68.3 74.2 75.6 73.8
Source: The 1979, 1984, 1989, and 1994 NSFIE.
166 Chapter 5 Savings and Wealth in Japan
TABLE 5.8 Saving Rates of Homeowning Households by Income Class
Income class (%)
Year Age I II III IV Mean
1979 –24 5.5 3.3 22.7 29.2 19.4
25– 3.7 20.6 28.6 39.7 28
30– 5.1 20.8 26 38.3 26.6
35– 6.4 21.8 28.3 38.5 27.6
40– 2.7 20.5 25.9 37.9 26.1
45– 2.7 16.5 24 32.1 22
50– 0.4 17.9 25.3 36.2 24.9
55– 6 20.3 27.1 42.3 28.8
60– 15.5 14.5 26.5 44.5 28.2
65– 21.5 11.5 33.7 52.1 34.1
70– 26.9 12.8 23.5 54.5 34.5
75– 7.2 7.8 23.5 47.1 31.2
80þ8.5 5.3 29.2 54.9 37.7
Average 0.1 19.5 25.8 38.2 26.4
1984 –24 5.4 13 19.4 44.2 26.8
25– 5.1 22.9 31 39.6 29
30– 11 23.4 31.3 42.2 31
35– 11.6 25.3 33.2 42 31.7
40– 6.5 25 31.4 40.2 29.9
45– 1.9 21.3 27.4 36.1 26.1
50– 0 22.9 28.5 36.6 27.3
55– 4.2 22.4 31.5 40.1 29.7
60– 3.1 19.8 32.4 44.4 31.9
65– 2.7 13.4 31.7 47.3 32.6
70– 0.6 14 26.2 44.5 30.5
75– 0.4 21.3 29.2 49.6 35.7
80þ13.9 7.2 19.1 41.6 27.1
Average 3.2 23.3 30.5 39.5 29.5
1989 –24 20.9 58.6 13 37.1 10.3
25– 3.6 26.2 35.3 41.4 31.2
30– 14.9 30.2 35.7 44.1 34.7
35– 15.8 28.4 34.8 47.1 35.2
40– 16 28.5 34.5 43.8 34
45– 12.5 24.6 29.3 40 30
(Continues)
5.4 Saving Rates by Income Class 167
The acquisition of a house is probably the most significant consumption decision
each household makes over the life cycle. Therefore, saving behavior is quite
likely to be affected by the housing purchase decision (see Hayashi et al. 1988b).
Table 5.7 presents the age profile of the homeownership rate. Regardless of the
survey years, the rate starts rising at around ages 30–34 and reaches a steady-state
level (i.e., about 90%) at ages 55–59, just before retirement. This steady-state level
seems quite high by international standards.
Table 5.8 presents the saving rates of households that own their homes. This table
shows that it is income class that mainly differentiates saving rates. Homeowning
households with little, if any, saving motivation for housing purchase keep high
savings, except for the very poor elderly households.
TABLE 5.8 (Continued )
Income class (%)
Year Age I II III IV Mean
50– 11.9 28.6 33.4 39.8 32.2
55– 2.6 31.1 38.2 43.8 35.2
60– 3.6 15.7 34.1 46.3 32.2
65– 7.7 15.7 29.6 48.9 32.3
70– 4.9 11.5 29.7 51.2 33.9
75– 13.1 19 21.1 48.4 32
80þ21 27.7 32.3 42.3 31.9
Average 7.9 26.3 33.8 43.1 33
1994 –24 10.3 15 38.2 46.9 32.5
25– 13.4 27 36 46.1 34.5
30– 20.7 33.2 35.1 47 36.9
35– 26.5 34.7 37.9 48.4 39.3
40– 20.2 33.7 37.6 44.1 36.6
45– 14.5 26.6 30.6 40.7 31.2
50– 16.9 28.2 33.5 44.5 34.3
55– 16 31.3 37.8 44.3 36.5
60– 6.9 15.8 29.4 46.3 30.5
65– 2.5 11.9 27.3 46.3 30.1
70– 2.9 12.9 18.9 45.7 27.8
75– 4.8 17.4 27.8 47.9 31.7
80þ 14.2 22.1 35.6 56.8 42.5
Average 10.3 28.5 34.2 43.9 34.1
Note: Income classes I–IV are yearly income quartile groups.
168 Chapter 5 Savings and Wealth in Japan

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