The above chart is courtesy of Claus at Alpha.Sources blog, and bears close examination. You see that household income has experienced negative growth since about 1997 and household savings has been shrinking since the turn of the century. I believe this data is consistent with an increasing proportion of retirees to the Japanese population as a whole; as once the breadwinner retires income shrinks to whatever pension/social security payments are forthcoming and the households of retirees start to spend the savings that they have accumulated over the years to make up for the drop-off in income. This shouldn't be surprising as the whole point of saving during one's working years is to provide for retirement. The tricky part is making sure you have enough savings to last until you die.
The problem from a national perspective is that due to the need for retirees to spend their savings, the national investment capital base is beginning to shrink. For the most part, Japanese savers have their cash in domestic investments. The shrinkage of available investment capital will make it difficult for the country to come up with technological breakthroughs that would increase productivity enough for the working age population to cover the cash needs of the country's retirees.
A study by McKinsey and Co. projects that "the net financial wealth of Japanese households will decline 0.2% annually between 2003 and 2024." That projection ought to give Japanese leaders some sleepless nights.