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Friday, October 28, 2011

Elderly Japanese control most of that country’s savings

According to a BusinessWeek article from 2000 Japan, a Nation of Risk-Takers? (int’l edition)
Seniors aged 60 years and over own about 70% of Japan’s $11 trillion in household financial assets. Only 9% of that is directly invested in stocks and a mere 2% in mutual funds.”

Eleven years later should mean that Japanese 71 and over hold 70% of $11 trillion or $7.7 trillion in household financial assets. As these individuals pass away, a significant amount is likely to be passed down to heirs. Japan has an inheritance tax that ranges from 10% to 50%; perhaps the Japanese government will realize a tax windfall from the inevitable.

It seems unlikely that elderly Japanese will start cashing out their savings and increasing their spending as the inevitable approaches.

Since much of this savings is held in the form of Japanese government debt, inheritance taxes might reduce the country’s total government debt level.