Things are pretty bad here too
The retirement crisis in the US seems to be getting worse. Here's a nice post by Retire By 40 on the subject.
Here in Japan things are not much better!
This is a new guest post by Desmond P. who is rapidly putting me to shame with his contributions. I made a Desmond P. category so those who just want the good stuff can click and read his posts more easily ;)
DP: I came across a series of recent news articles that essentially covered the same topic, but with information released in drips and drabs (no idea why).
Piecing the disparate information together, however, proved to be a very sobering yet interesting read which also happens to dovetail with the aim of RetireJapan so I thought of sharing once more.
According to a Health, Labor and Welfare Ministry survey, 25.2% of all households in Japan comprise seniors and/or couples aged 65 or older.
Among these households, 58% are facing difficulties in making a living, while at the same time 55% of the same demographic have no other source of income save their pensions or retirement benefits [link].
According to a different (maybe the same?) survey from the same Ministry, 58% of all households comprising of people aged 65 or over, or with children under 18, are facing financial hardship.
Only 8.5% of these households earned the national average household income of ¥5.42 million, with the remainder earning an average household income of ¥2.97 million [link].
According to a report from the Organisation for Economic Co-operation and Development (OCED), 80 percent of Japan’s total public expenditure was spent on pension, medical and public nursing services.
This mainly benefits elderly people, and the budget allocation to sustain it is set to further increase in future.
Also, according to a Nippon Institute for Research Advancement (NIRA) simulation, babies born in 2015 will be paying 48.4% of their lifetime incomes to support public expenditure.
For those in their 30s the figure is 13.5%, whereas those aged 85 or older receive more benefits than what they paid in [link].
In terms of the overall picture, if the elderly who worked throughout Japan's bubble era are unable to have a comfortable retirement despite paying less than 13.5% of their lifetime incomes to receive over 80% of government spending on them to the tune of an average of ¥2.97 million annually, then it very strongly reinforces the notion that those in our age range ought to take full responsibility to have alternative sources of income ready before the mandatory retirement age.
My personal takeaway? For those among us who have yet to set aside a fixed portion of our salary to invest, best start now. For those who have already started, stay the course no matter what happens.
Our future selves will thank us for it :)
RJ: This is pretty shocking stuff, and I think we can all agree that government pensions and social security are unlikely to increase in the future. I think it's more likely that we'll see further cuts and even means-testing.
I'm also worried about wealth taxes and other forms of government revenue raising, but that is a post for another day :)
My official stance is that everyone, regardless of their income, should be saving 20-50% of their income for emergencies and retirement. Stay tuned for my new book(let) which will tell you exactly how to do that.
In the meantime, Mister Money Mustache's latest post is pretty relevant too.