I just came across this Bloomberg Article which looks at a survey on the state of the world’s pensions. The Netherlands and Denmark are the only countries to come out of the survey with an A-Grade, and there is some concerning news for people planning to retire in Japan, which came in 32nd and received a D-Grade.
Japan’s replacement rate, which is the percentage of pre-retirement income that retirees can expect to receive, is just 37%. Given Japan’s high life expectancy, this is likely to result in the raising of the state pension age. This means that not only are those nenkin (pension) contributions going to be inadequate by the time you finish working, but you are likely to have to wait longer to get them back.
As a visitor to this blog, you are probably already well aware that the Japan state pension is not something you can rely on to cover retirement income needs, and that you really need to be saving and investing by yourself if you don’t want to be struggling to make ends meet later in life.
Here are a few things you can do to supplement your retirement savings:
- Consider contributing to iDeCo. iDeco is a tax-advantaged private pension you can use to boost your retirement savings. (eligibility is covered in the link above but generally it is open to anyone who pays into the Japan National Pension Scheme)
- Start a NISA. NISA is also a tax-advantaged savings account which is open to all residents of Japan over the age of 20.
- Open a brokerage account and start investing in stocks / ETFs. (update coming soon on available accounts)
- Start an offshore regular savings plan or overseas platform account.
As always the key thing is to develop a plan. Think about the income you want to have in retirement and work backwards to figure out how much you need to be saving and investing now in order to get there.
Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.