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Embarking on a 2nd career post-retirement makes economic sense

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Two numbers will help us get our bearings: 100 million and 20 million. The first refers to a Japanese ideal that took shape in the immediate postwar period: a middle class that included the entire population. By the 1980s it seemed largely realized.

The second figure is the amount of savings in yen a recent government report suggests is needed for a comfortable extended old age, at a time when living to 100 and beyond is by no means exceptional, and must be prepared for. It indicates, says Shukan Post (Aug 16-23) how far the nation has deviated from its postwar ideal.

The current reality is encapsulated in the now ubiquitous neologism kakusa shakai (gap society). The gap, steadily widening, is between the rich and the poor, who a generation ago were much closer together than they were in most other capitalist economies, the U.S. in particular. Who has 20 million yen? Among seniors aged 70 or more, 27.9 percent, say government figures. That means more than 70 percent don’t. And of those, 28.6 percent have “no finances at all,” the government study quoted by Shukan Post says. In a nutshell: one-third of retirees are prosperous, and one-third in poverty.

What came to be known as “the 20 million yen problem” has generated a lot of anxiety. It has focused attention on what inevitably lies ahead for people now in their prime – an old age that, as currently defined, lasts 40 years, or longer, with escalating levels of necessary and costly medical and nursing care. A typical situation is that of an 80-year-old with a pension worth 200,000 yen a month contemplating entering a nursing home whose fee is 300,000 a month. The inescapable conclusion: your pension entitlements will no longer carry you safely and comfortably to the grave – if in fact they ever did.

But despair is uncalled for. Shukan Post’s report is hopeful rather than the reverse. Twenty million may sound more daunting than it is. Of course the old model household that prevailed while the 100-million-middle-class idea was at its height – salaryman dad at the office, housewife mom at home – is no longer tenable. The economic demands of longevity, to say nothing of women’s expanding aspirations, make it impossible. So much the better, the magazine hears from journalist Akira Tachibana, who has written extensively on the subject.

“I know a woman,” he says, “who after college had no work experience at all.” She raised her kids, and in her 40s, the kids grown, she went job-hunting. She found part-time work with a publishing firm and worked her way up; eventually, still part-time, she was earning 2,000 yen an hour. By the time she retired at 70, she had set aside 50 million for her old age.

So it can be done. The key for most people, says Shukan Post, is to acquire some technical qualification while you’re young enough to. The technically skilled will have no trouble finding post-retirement work outside their present companies – a good idea, in the magazine’s view, given that post-retirement work with the same company almost always means a steep salary cut.

What’s involved is nothing less than a redefinition of old age. It cannot, for most people, begin in the 60s.  Take the “second life” notion seriously, is the magazine’s advice. Embark on a second career and figure on working well into the 70s. This not only makes sound economic sense – it’s also healthy. You keep mentally and physically alert, you stay socially active – the dark dread specter of dementia, with escalating costs all its own, retreats in search of more vulnerable victims.

It’s excellent advice, and certainly optimism is better than pessimism. But why, the reader wonders, is no mention made of the “lost generation” – those who on graduating from college ran into the hiring freeze of the 1990s and 2000s which condemned many of them to menial part-time work that has led nowhere and taught them few marketable skills? They are now heading into their 50s. Soon old age and retirement will be upon them. How many of them will be able to raise 20 million yen?

© Japan Today

©2019 GPlusMedia Inc.

4 Comments
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I will never retire. Too many things to do, too many ways I can help.

1 ( +1 / -0 )

Better to keep working in some capacity or volunteer. The idea of retirement should be you work less or work doing something you enjoy but are not well paid as opposed to doing nothing.

2 ( +2 / -0 )

The given example of the lady who gets 50 millions at 70 means more or less : no holidays taken, no donation to her children or anybody else, no taxes, no investment.

What a life!

The poor thing in Japan is investment : no return locally (real estate, long term rate rate bank accounts, stock exchange, etc).

If you invest out of the box, you will make it easily.

0 ( +0 / -0 )

“I know a woman,” he says, “who after college had no work experience at all.” She raised her kids, and in her 40s, the kids grown, she went job-hunting. She found part-time work with a publishing firm and worked her way up; eventually, still part-time, she was earning 2,000 yen an hour. By the time she retired at 70, she had set aside 50 million for her old age.

Run the numbers and this story is highly unlikely. Assume 1600 yen an hour as average wage and 50 million yen is 31,250 hours. She's "part time" so no bonus. The last 25 years have also seen very little interest on Japanese savings, so we'll assume zero RoI for convenience. 31,250 hours over 25 years (starting mid forties after "kids have grown up") is 1250 hours a year in pure savings. That means living on however many more hours of work and putting aside 100 hours' worth of salary every month, for someone supposedly working "part time".

She could of course have invested and acquired the sum through compounding, but it then becomes a story about successful investment at higher than typical Japanese returns, not one of building up large savings through "working part time".

This 20 million yen problem seems to assume people have a 200,000 a month pension as a starting point. Millions have far less.

2 ( +2 / -0 )

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