Article at a glance:

The economic impact of an aging Japan

By 2024, more than a third of Japan's population will be over the age of 65, making it one of the oldest in the developed world. Retired households will outnumber households in their prime saving years, so savings rates will fall dramatically, and Japan's financial wealth will begin to decline. The continual improvement in living standards that the country has enjoyed over the past half century will come to an end.

The take-away

A decline in financial wealth could bring down Japan's living standards and spread the economic misery to other countries. But this outcome isn't inevitable. Japan's future growth will depend on concerted efforts to increase the returns earned on financial assets and to persuade younger people to save more.