One reason for the paucity of recent evidence on life cycle wealth accumulation in high-informality settings is the rarity of the repetitive, consistent, and representative microdata with reliable wealth variables needed to disentangle age, year and cohort effects. Most previous examinations of life cycle saving behavior have examined savings rates measured as the residual difference between income and consumption. For example, Deaton and Paxson (1994) examine the case of Taiwan, China, between 1975 and 1990, a country that was further along its demographic and economic transition to high-income status at the time than Pakistan is now. A smaller number of studies measure wealth and its changes with age directly (e.g. Lydall (1953), Shorrocks (1975), Wolf (1981) or more recently Cagetti (2003)) but focus on rich countries. We are not aware of lowincome country descriptions of how the value and mix of assets owned by households evolves over the life cycle. Pakistan’s PLSM survey is uniquely positioned to help empirically pin down the patterns in life cycle wealth accumulation, through the availability of repeated cross-sections spanning more than 18 years and detailed asset data that is homogenous over the survey rounds. This allows us to follow cohorts as they age and analyze most forms of savings (including housing, land, financial assets, business value, durables and liabilities).

We find that Pakistani households accumulate significant levels of wealth (relative to their consumption levels) and that most of that wealth is relatively illiquid. The average Pakistani household’s net worth grows by 60 months’ worth of consumption (5 years) between ages 25 and 65. The bulk of this increase in the form of residential housing, whereas other forms of wealth such as land, durables, business and farm values and financial assets stagnate over the life cycle. Asset accumulation is slower early in the life cycle and picks up speed between ages 40 and 65. This is corroborated by our findings on the age profiles of consumption, income, and the saving rate. Until age 40 consumption and income grow at identical rates, but consumption slows down relative to income thereafter, increasing the rate of saving. Land is an important part of rural households’ portfolio but grows little over the life cycle (10 months’ worth). More liquid forms of wealth such as financial wealth or durables also grow with age, but in much more modest amounts.

Consistently with the above, we find that accumulated assets are a significant source of subsistence for elderly Pakistanis, in the form of renting or selling land, equipment, animals as well as imputed rental income from living in one’s own dwelling. Income extracted from assets represents roughly a third of household consumption in households that include an elderly member (labor income and transfers account for most of the remainder). However, labor force participation rates among elderly men are sizeable (39.1%) and very few elderly Pakistanis live alone or with their spouse. This indicates that asset accumulation is not sufficient to allow workers to retire or live on their own if they chose to do so.

Still, consistent with improving living standards and expectations that family support may be less available than in the past, the proportion of 65-year-old heads with more than 5 years’ worth of consumption in net worth increased from 30% in 2001 to 50% in 2018. To the extent that pooling all wealth in housing is suboptimal, this pattern suggests a potential demand for long-term saving schemes designed for the informal sector.

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