A Micro-Analysis of the Life Cycle Model and Savings Determinants with Late Labour Engagement

The Nigerian economy has grown moderately in the past years. A major way of increasing economic output is raising investment, through savings mobilization. Scanty evidence exists on the savings’ determinants from a micro perspective in Nigeria.Using a synthetic cohort approach and six waves of surveys (1980, 1985, 1992, 1996, 2004 and 2009), this study profiled the savings pattern of households and examined savings determinants in Nigeria. Household savings pattern validated the Life Cycle Hypothesis, but did not hold for age group 65-79. Savings rate among the working group peaked late at 60-64, indicating increased saving till retirement due to poor retirement income security during the periods.The empirical findings show that rural dwellers and women are thriftier and higher educational attainment reduces savings. The latter finding suggests that higher education may not necessarily increase savings in Nigeria due possibly to high unemployment among the educated, and trade-off between higher savings and increased spending on children’s education. The government should provide a more conducive environment for informal sector actors due to its high employment absorptive capacity. Rapid financial inclusion in the rural sector and women empowerment are key ways of mobilizing savings for growth