How much money do you need to retire in Japan?
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- Опубликовано: 26 июл 2024
- If you live in Japan or are thinking of doing so in the future, you might want to think about how you are going to pay your expenses in retirement...
Do you know your 'number'? How much will you need to live in retirement in Japan? How much are you likely to get in pension income? And will it be enough?
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Blog post on this topic: www.retirejapan.com/blog/how-...
Article about renting in retirement: catforehead.com/2023/07/03/de...
UK state pension voluntary contributions from abroad: • The BEST investment fo...
How to read the nenkin teikibin (年金定期便) annual statement: www.retirejapan.com/blog/japa...
See the RetireJapan main site for more blog posts and information: www.retirejapan.com/
Get our FREE guide to personal finance in Japan here: retirejapan.gumroad.com/
Join our forum to ask questions and discuss personal finance in a friendly environment: www.retirejapan.com/forum/
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00:00 How much money do you need to retire in Japan?
00:50 The shocking Japanese government report about retirement
02:12 Trying to estimate spending in retirement
03:01 How to actually work out how much you need to retire in Japan
04:20 Estimating spending in retirement in Japan
06:29 Housing costs in Japan (and not being able to rent in retirement!)
06:57 pension income in retirement in Japan
09:07 what if your pension isn't enough?
09:39 using savings and investments for retirement
10:08 safe withdrawal rates (the 4% rule)
11:50 plans are useless
12:37 what is our plan?
15:56 how about you?
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#Japan #investing #personalfinance #lifeinjapan #NewNISA #iDeCo #retirement #retiringinJapan #nenkin #年金
Thanks for this video too, all very useful information
My pleasure!
Thanks for this, Mr. S!
My pleasure! Good to see you on the channel ^-^
Thank you. Hmm. It's a lot to think about. I appreciate your willingness to share your story. It helps me think about how we are doing.
You're very welcome. Please let me know if you have any questions.
As well as the RUclips videos, we also have a website at retirejapan.com with a very active forum.
@@RetireJapan_OG Yes, thanks, I also like the weekly blog, and the website. My wife (Japanese) and I are planning to move to Japan for retirement in a few years, so we need to plan, learn, and not become complacent.
@@robertgulfshores4463 Good luck with the move!
Very helpful information! Thanks, Ben.
Absolutely my pleasure! Thanks for watching ^-^
Excellent!
Thanks!
Great video!
Thank you!
Great video! I came to Japan quite late, (over 30 yo), so I’m not expecting anything great from Nenkin.
My current company offers a 401(k) plan and just last year I started my つみたてNISA account.
I have been avoiding to concretely think about retirement, but your video was a wake up call. Especially because we pay rent and I don’t think we should get a loan to buy a house at this moment
Thanks! Seems like you are on the right path ^-^
The main thing is to keep saving and investing money every month for the long term.
Once you decide you want to live somewhere for good, it can make a lot of sense to buy (mortgage will often be cheaper than rent for an equivalent property).
素晴らしい計画ですね！年金以外にも資金があってあなたの老後がうらやましい👍️
ありがとうございます！今からNISAやイデコを使って誰でも簡単に投資に挑戦出来ますので、ぜひ試してみて下さい！
Summary:
-20 million yen + Pensions total is a good starting point
-3.5M yen /yr is their plan, own their own home, do no have lavish expenses
Personally, I think you need like 5M yen/yr to have a 'good' and safe withdrawal rate. This depends on if you own your own home and keep your avg expenses down. Cheers and thank you for this information!
My pleasure! We're in a much better situation now I think: up to 4m a year in pensions + whatever we take from our investments 😀
Thanks. Hopefully the inflation will not hit to hard in Japan in the next 10 years and the yen will stay similar to the Swiss Franc as it is now. If this is the case I'll be able to retire in Japan very nicely.
I wish I knew what the yen was going to do 😉
Do all the things you always wanted to do….like go on a safari…. Haha
Only really opened up my eyes to looking towards retirement when I turned 30. Glad I did now as could easily be left too long and miss out on a lot. Great video!
Thanks! Funnily enough, I have a mate in the UK who loves going on safari, so... ^-^
My biggest pension shock came when my
Boss (almost 75) told me that because he earns a wage, the government takes back 50% of his pension. WTAF? That koseinenkin is based on personal and company funding so I am really surprised.
Interesting. I was not aware of this. I think your boss is exaggerating slightly though 😅
You get the kokumin nenkin portion in full. If your kosei nenkin plus salary is more than 480,000 yen a month the kosei nenkin portion is reduced.
More details here: www.nenkin.go.jp/tokusetsu/zairou.html
Great video. Do you have any views on what the UK pension will like be in 15-20 years? I'm basing my current planning allowing for triple-lock increases to my current UK pension estimate given. Should I be reducing the current estimate by 5-30% in your opinion... (Japan pension office lost 6+ years of my pension records and so my Japanese pension forecast is looking to be very poor...)
I have no useful information on that. Personally I am aiming to be okay without pensions, so that any pensions I get are just gravy.
For planning I would probably discount both the UK and Japanese pensions slightly, as I would rather be pleasantly surprised than disappointed.
I haven't run any numbers, but I've definitely researched the iDeco and the NISA a lot. I'm keen to pay into them both, but the issue is that I'm on the JET Programme. As you know the JET salary is artifically high for what the job is, and comes with a strict 5-year rule. If I manage to move industry and build a career with salary growth, then I'll definitely be investing, but otherwise I may need to return to the UK.
You mentioned in your previous video that you were considering naturalising down the line. Would you still be able to pay into the UK pension if you did so? I'm wondering if the requirement to renounce your British citizenship would disqualify you from paying into the UK pension pot.
I definitely need to do more research, but my understanding is that the UK state pension is not based on nationality but instead on having a National Insurance number and having paid in. Non-British citizens who have lived and worked in the UK are also eligible to pay in on a voluntary basis and receive their pension in retirement as normal.
"We are the government and we are here to help you!" Scary words always. I managed to live, in Hong Kong, without having to pay for retirement but also not planning to get anything either. As my Japanese wife and I plan to move to Tokyo, I'm glad we don't have to calculate the fate of semi bankrupt pension funds into our financial future. Great videos! Keep em coming.
Thanks, will do!
Great video Ben. You should be a financial advisor! In fact, are you still offering financial advice?
Thanks! We have never offered financial advice, but we do have coaching: www.retirejapan.com/coaching/
@@RetireJapan_OG thanks Ben, I will look into it
I am a huge fan of your videos. A quick question. I apologize if it's a topic that you don't cover. I have an American friend who has counseled me NOT to set up a My Number in Japan. He says there is a lot of downside because the Japanese government can then track you. But the flip side of the coin is that My Number might be useful for certain transactions or business in Japan. Do you have any thoughts on the pros and cons of establishing a My Number?
Your friend is sadly misinformed. Everyone living in Japan already has a My Number. The only element of choice is whether you apply for the plastic card or not.
If you don't have the plastic card, every time you are required to provide proof of your My Number (when opening accounts etc) you will need to get a copy of your jyuuminhyou.
In practice, having the card makes life slightly easier (you can do your taxes online, open accounts online, and -somewhat ironically- print your jyuuminhyou and other official documents at convenience stores rather than having to go to a government office).
There was talk of combining My Number with health insurance cards, driving licenses, and zairyu cards in the near future, so it seems likely that not having a card will get more and more annoying if you live in Japan.
Hi! I just found your channel yesterday, but it is really appealing to me. I'm more or less in the same situation as you, 20 years in Japan, Japanese spouse and kids... But I can't read... So your videos are going to help me a lot! I just have two questions, first when you say earning 7 million (are you talking yearly or monthly) and could you or do you have a book recommendations list? I'm always interested in books on display but I can't see the titles well on my phone! Thank you!
Welcome! 7m a year, ha, ha. 7m a month is inconceivable to me ^-^
I'm planning a video about the best money books: should be out soon-ish!
@@RetireJapan_OG Thank you... Same here! Looking forward to the list!
Looks like the UK pension back payments has been extended again. Good news!
Yes, to April 2025! I predict they will never clear the backlog and continue extending this forever... ;)
I applied in March this year and HMRC shows to expect a reply by January 2024...
@@OkinawaSeasider Yeah, the backlog is insane at the moment. Hang in there!
Can you make a video about the tax deductible form of life insurance in Japan? When/whether it makes sense to get it, the conditions etc.
Nice idea! I will add it to the list 😀
@@RetireJapan_OG Thanks :)
They mention number around 20 million yen. I don't think it feasible. My number is around 80 - 160 million yen.
Everyone's number will be different. It is important to understand your own situation and plan accordingly!
I appreciate your RUclips. Very informative. I am a Japanese citizen, planning to return to Japan after living in USA for over 45 years. You said you expect to receive 1.5 million yen from UK pension. How much will you have to pay to Japanese and UK government for income tax and Juumin zei? Thank you
Thanks for the nice comment! The UK and Japan have a pension treaty, so UK pension should only be taxed in Japan. Nenkin and UK state pension would both benefit from the 年金控除 tax allowance.
My total pension income is likely to be around 2.5m yen, so I am not too worried about income and local inhabitant taxes. My other income will be from investments so currently taxed separately at 20.315% or not at all if in tax-exempt account like NISA.
I literally have you sell my UK home in order to retire. The only thing that might save me is inheritance from my father. My kids will be back to zero though, not going to be helping them much.
Victoria Carmen Santaella , lookup with her name online.
you mentioned 5 million for retirement, is that the net amount?
I'm not aware yet on how to calculate the tax once you start living on retirement with supplementary amount from your investment. will be great if you can cover that part in your video.
Yes, net ^-^
Taxes will very much depend on your situation.
Using the New NISA to invest will mean you don't pay taxes on the contents. Capital gains and dividends are taxed at a flat rate of 20.315% and are not included in income tax.
Pension income has a special tax allowance.
So most people are not going to be paying a lot of tax in retirement.
7:22 I had a chat with the UK pensions people and my take home from it was that; if you’re abroad, your pension income is fixed from when you first receive it and thenceforth doesn’t increase with inflation.
The guy then said ‘unless you live in the Philippines.’ Where they set up something.
Anyway, he put me off continuing with my contributions.
Does this tally with what you know?
That is true. More info here: www.gov.uk/government/publications/state-pensions-annual-increases-if-you-live-abroad/countries-where-we-pay-an-annual-increase-in-the-state-pension
I would argue that the voluntary contributions are incredibly attractive anyway as they are so cheap. There is also a chance the system will be changed in the future to allow increases in Japan too, or you may move back to the UK or to a country that allows increases.
@@RetireJapan_OG Will the Japanese Tax people take 20% of your UK pension income?
@@retroecho It's not quite that simple. You will likely need to do a tax return in retirement, so you would add your UK pension income to that.
Japan has a public pension tax break (details are here but it is quite complex: www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1600.htm). You don't pay tax on the first 1.1m yen of income from pensions (combined nenkin and UK state pension), then a reduced rate after that. I doubt you'd end up paying as much as 20%, but that would depend on your total income etc.
May be 1,000,000$
For some people that will be more than enough, for others not enough -best to figure out your own numbers😉
Hello, I am a new subscriber.
Great work! I've got a question and it's a genuine one.
What do you think of Wealthnavi and would you recommend it or the 1% is just not worth it?
Welcome! My take on Wealthnavi and similar robo-advisors is that they are better than not investing, but most people will end up much better off investing in low cost mutual funds in the new NISA 😀
@@RetireJapan_OG what if we are already using Nisa and counting on maximizing it but with long term with 100 stocks and looking to have a balanced portfolio in 特定口座 and easy to manage so that when retiring switching to less risk, living off with the bonds returns while keeping the stocks in Nisa for even longer ??
Would that be worth the 1%
I think the question is what do you expect to get for the extra 1%? If you are already investing and know what to do what will adding a robot-advisor do for you? A 1% fee could take 20%+ of your profits over time -potentially a huge amount of money.
@@ghazikerkeni7031
@@RetireJapan_OG yes, I did the calculations and was surprised of that fact. What I am expecting to get and please let me know if it is worth it or not, is to have a care free situation where at each moment I would be following the modern portfolio (maximum return for each risk tolerance level) switch between levels at my need and possibly better insights on timing the market to add whenever it drops and withdraw later whenever there is need without calculating and rebalancing the amount of needed bonds etc...
It is not possible to time the market and for many people simple is going to be best, but if you think you need all that and think that it is worth 1% then go for it.
At the end of the day we just need to reach our goals so being aware of your goal, saving enough, and investing in something sensible is going to make the biggest difference.@@ghazikerkeni7031
What if you have the US retire money and living in Japan? Is it possible?
As long as you can get a visa, currently having US income and living in Japan is a great option!
Is 1 million usd enough to retire in japan at 40 years old with the current exchange rate?
That will depend on all sorts of things, including what kind of lifestyle you want, what you do with the money going forward, etc.
I would be happy doing that.
If you have $1 million saved hire a financial planner and discuss the details.
Do you think someone (dependent spouse and no children) with ~700K USD (cash and ETFs) moving to Japan at 40 years old and reasonable spending habits has any reason to be concerned about taking two years off of full-time work to learn the language?
You could live on that much money for decades, if not indefinitely, in Japan ^-^
@@RetireJapan_OG Thank you for the reassurance! If we ever end up in the Sendai region, I'll buy you a coffee or beer!
@@arzelaascoli6765 Sounds good 😁
I do like coffee...
If I had that, I'd be retired.
700,000USD is about 100million yen.
Take out 3.5% a year and live off 3,500,000 yen.
Maybe a little tight for two in Tokyo, but should be very comfortable in most cities.
Especially if you supplement with a little part time teaching (or other part-time work.)
@@Martin_Edmondson Thanks for the advice!
Few things to note is that because Japan has its nationalized healthcare system and elderly care insurance, you may not need as much to retire comfortably than in many other countries. It's known as the most socialist of capitalistic country in the world. So if you just want to retire comfortably, it might be more than fair to you but if you want to retire in luxury, it'll seem like hell because your excess accumulation is deemed to be because of the community helping you successfully getting to that point. Therefore, if you're in that fortunate situation, forced pay back to society in the form of high taxation awaits in form of local and national income tax as well as high gift tax and high inheritance tax.
Difficulty renting an apartment later in life is something that the government ought to fix because of the super aging population and also because a significant portion of that population are single and don't have family support either.
Don't give anyone your money, and make sure the deceased don't give you any either - got it! Any other tips?
For someone living off nekin supplemented by investments income tax would not apply, surely?
And gift tax and inheritance tax can be reduced by paying for family's living expenses or just giving them under the gift tax limit each year.
Rich people's problems, methinks. We are comfortable but I don't see a particular tax issue with living in Japan.
@@RetireJapan_OG Of course, you're from a country that had even higher tax than Japan and higher cost of living. So it depends on which country you came from. Aside from that UK Japan treaty covers all types of tax shelters from the UK for both national and local tax.
Japan's Sogo Kazei table is called Chyoka Ruishin Kazei (Excessively progressive tax). Yes, it isn't just progressive, it by their own wording it is excessively progressive. There are added issues with this when relocating to Japan from elsewhere after working many years outside of Japan (whether you are a Japanese Citzien or not). Foreign pension aside from the public pension don't qualify for the kotekin nenkin to kojo (public pension etc. deduction) and instead you just have to figure out your cost in yen (like anyone remembers every single contribution you made over a few decades of work) so you end up overpaying in tax.
It's a good thing Japan finally decided to increase contribution limits to NISA (except worthless for US citizens). There were some complaints that it is favoring the "rich" but I think they don't realize that the idea is to help everyone, including those not investing. If you just keep taxing people higher and higher, pretty soon, there won't be any "rich" to pay the tax to support the social programs. So to preserve what's still in Japan and to grow it, they had to give some incentives just like with most other countries.
If you have a foreign bank account, the interest is reported as Sogo Kazei--no choice--you can't do Gensen Bunri Kazei to have a flat 20% tax and not have it impact your health insurance premium. In fact, every withdrawal in a non-yen account is a taxable event in Japan because of currency fluctuation. Japan does not have a small currency gain exemption like most other countries. If you have a foreign brokerage, you don't have the option to do Shinkoku Fuyo Seido to avoid your dividend income from impacting your health insurance premium.
US Citizens have the worse of all worlds. If you want to buy some US stocks, you're usually limited to US Brokerage. Aside from the double filing and often double taxation because the foreign tax credit has various limits. Buying any non-US mutual fund creates even higher taxation under PFIC. Foreign asset disclosure requirements in both countries. Both countries implementing their Exit tax system.
@@emikami1 I'm definitely more on the socialist end of the scale, don't have much patience for people who have more than enough complaining about paying taxes 😉
The way I see it that is just the price of living in a functional society.
If anything, Japan needs to work a bit harder on child poverty and social inequality.
@@RetireJapan_OG
One thing that I do agree with is having a fair tax system.
So what do you think is fair? Say you pay $5000 in the U.S. if you stayed in the U.S. You moved to Japan and you pay $7,000 for the same income and you pay another $1500 to the U.S. for a total of $8,500 on the same income. So instead of paying 40% higher tax, you're stuck paying 70% higher tax. Plus you paid $5000 for hiring two accountants to try to stay in compliance.
So is that just a price of living in a functional society?
It would be a lot simpler if pensions were taxed at the source country only and other income taxed only in the country of resident. That way, you won't be penalized on your pension income just because you relocated. Wait a minute, that's just like the UK Japan Tax Treaty.
Quote in USD please
We don't use dollars in Japan 😆
I am semi-retired and live mostly in Japan.i own multiple homes in 3 countries. In the Japanese countryside you can live with dignity with USD 40k. In bigger cities like Tokyo, owning your own house makes a big difference. You need around USD 100k to live a dignified life.
That is going to be different for different people, but 40,000 USD is more than 6m yen now, and that is much higher than the average household income in Japan 😅