Retirement Saving Over the Life Cycle: Evidence from a Developing Country.

Despite its importance, little is known about how individuals save for retirement through tax-advantaged vehicles over their working lives. Using Thailand's population of tax returns, this study examines the age profile of retirement saving and explores its implications for retirement savings adequacy. We find that the life-cycle pattern in retirement saving is hump-shaped across age. It rises from 3.0% when one begins working to 4.6% at age 46-48, then declines as one approaches retirement. The retirement saving rates peak later for higher-income workers. For all income groups, we also document the large role of the low-risk saving vehicle throughout the working life. Based on the predicted life-cycle saving profile, we estimate the income replacement rate from tax-advantaged saving vehicles to be around 24%, which is in line with evidence from advanced economies.