It would not be saying anything new to assert that demographic aging threatens to slow long-term economic growth, limit the (much sought-after) advance of productivity, and jeopardize the sustainability of welfare states in many developed countries. The academic literature on this is extensive, as is the accompanying economic debate. Yet the demography has more faces, and some, such as what happens to saving, become visible only when we look in detail at how household behavior changes as people grow older.
According to the standard life-cycle hypothesis, individuals borrow when we are young and our incomes are low, we save and accumulate wealth during the most active years of the working life, and we dissave after retirement because our income is lower and we do not want to give up many of our spending choices. If this were the case, in highly aging societies or in phases of accelerated aging, we should see substantial long-run declines in private saving. Cross-country studies that attempt to quantify the effect of demographic change on saving point precisely to this. However, the cause would not be so much the dissaving of the elderly as the smaller share of households in the active-working ages, with a priori a much higher capacity to fill the piggy bank (the 40- to 60-year-olds).
“In 2020, Spanish households headed by someone over 65 saved between 38% and 41% of their disposable income”
The microdata provided by national household surveys for the major developed economies confirm this idea: older households save more than expected (Japan or the United States) and, in some cases, even maintain saving rates similar to or somewhat higher than those of households in the adult middle age. Among the latter group, those in Southern Europe are included. In 2020, Spanish households headed by someone over 65 saved between 38% and 41% of their disposable income, while those aged 45–64 did so between 28% and 35%. In Portugal, the saving rates of the elderly exceeded those of the two younger cohorts by ten percentage points for that same year, while in Greece the gaps were even wider. In France, differences between what the elderly save and what younger adults save are not evident, whereas in Germany, Austria, or Denmark saving rates decline with age—though in a moderate fashion.
These differences do not appear to be cyclical: they persist across the two earlier data waves—2015 and 2010—and they are reflected in the evolution of wealth accumulated by retired households in some countries versus others. In those where saving has weakened, wealth tends to follow suit a few years after retirement; a pattern that, at least so far, is not observed in Spain. In 2024, the gross wealth of a typical Spanish household headed by someone aged 65–74 exceeded that of a 55–64-year-old household by €23,000; only among the oldest group, those over 75, do we see some signs of moderation.
“In Southern countries, informal at-home care still predominates, carried out by individuals with some kinship ties”
So, what lies behind these differences? The answer is multifaceted. On one hand, there are public pensions, which, with relatively generous levels, help to cushion the income step created by retirement. On the other hand, there is the mortgage-free owner-occupied housing regime, which is the majority among older households in the south and greatly eases living costs in old age. In Spain, Italy, or Greece, around 85% of households over 65 live in a home they own; a share that in Germany or Austria is between 50% and 60%. To this one must add that many older households also own another property, from which they can obtain additional income if they decide to rent it out. In Spain, more than половина—half or more. A last factor, perhaps as important as the others, is how care networks are organized and the role that the family plays in attending to dependency. In Southern countries, informal at-home care still predominates, provided by people with kinship ties; a reality that contrasts with the situation in Northern European countries, where care is far more professionalized and aging in a residential center is more common.
These saving patterns may change in the coming years. Today’s older generations retired with a paid-off house, little debt, and the support of public benefits. Future cohorts will do so with more irregular career paths, increasing difficulties in obtaining housing, and less support from traditional care networks. By then, the older people in the South may resemble those in the North, but not necessarily for the same reasons.
