Analysis of Financial Anxiety in Old Age

Abstract

A survey by the Japan Institute of Life Insurance (JILI) in 2016 revealed that 85.7% of the respondents feel anxieties about their retirement life. On the other hand, a simulation by Taniguchi and Otsuka in 2020 conducted based on the National Survey of Family Income and Expenditure concluded that more than 80% of Japan’s households are unlikely to use up their savings while they are alive. The difference between the two stats indicates that the working-age generation people are too pessimistic and overly concerned about their retirement life. The purpose of this essay is to analyze the characteristics of households that have anxieties about retirement life despite the low probability of savings depletion, and to reveal the factors of the financial uncertainty related to retirement life. The conclusion is as follows. The factor of the anxiety, despite the low probability of using up savings while one is alive, is not the age but the household income. The household income level that arouses uncertainty seems to become lower as people get older. Also, those who are more dependent on the public pension are assumed to be more concerned about their retirement life. On the contrary, households with a profession such as agriculture, forestry, or fisheries that don’t have to retire and can earn income even in their older age tend to feel less concerned as they grow older.