The evolution of household savings: determinants and implications

Laura Boyd, Stephen Byrne and Tara McIndoe Calder
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Laura Boyd: Central Bank of Ireland
Stephen Byrne: Central Bank of Ireland
Tara McIndoe Calder: Central Bank of Ireland

Quarterly Bulletin Articles, 2025

Abstract: The fraction of their income that households across the income distribution save has grown over the past two decades. In this Article, we show that higher savings rates are consistent with structural features of the economy – including an increasing share of households preparing for or in retirement, as well as an increase in the savings of younger households who cite housing as a reason for saving. Detailed householdlevel data suggest that older households have increased their savings to fund intergenerational transfers. We also show an increasing preference for households to save in riskier financial assets and private pensions. Looking ahead, the savings rate is projected to remain high with the share of wealth held in financial assets likely to grow as housing constraints limit the ability to invest in these real assets.

Date: 2023-03
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