Advice on flexible retirement investing for dummies??

[JimmyJazz]

Hello,
I wonder if anyone has any advice or is/has been in similar situation.

I am new to this but have read the basics and understood what I should have been doing for years but always prevented by uncertainty. Until now I have just put any money I had into paying off a mortgage on small apartment in UK.

I am a researcher in Japanese government Institute, with permanent position and herein lies the problem.
The salary is good and job is about perfect in terms of freedom and resources for research and travel. However, as I've heard is case in some companies, there is basically forced semi retirement at age 60, where salary can be cut by half or more if you stick around.
You can avoid this if you move into management, but given that I am not Japanese and management means essentially working in the ministry, that seems pretty unlikely and not heard about this happening to any other non-Japanese researcher.

Given the size of my mortgage and possibility of uni fees at this time, this rule means I'm going to be forced to move jobs at some point in the coming (5-10) years. There are options, but given the specialized nature of my research it is likely that I will need to consider jobs (University positions or companies) outside of Japan and subsequently would like to keep all options open. I think we would still plan to retire in Japan, but would not like this to be set in stone. The most likely country for work (and possible retirement) would be UK (if not North Europe)

So, my main question is: What is the best strategy to keep my options open? Is it still all about the NISA and iDeCo while I am in Japan. What happens to these if you leave?
Other questions would be:
Does investment income in NISA or equivalent guaranteed to exceed interest cost? i,e Should I just be paying off mortgage instead of investing?
If you leave Japan with PR, can you keep paying voluntary pension contributions?
Is there a sensible way to invest rental income in the UK, while not a resident?


Other relevant info:
I am British citizen (early 40s)with permanent residence in Japan. Japanese wife and young child. Wife has lived in UK, so ok with it and also happy to live in Europe.
I have been paying in to Japanese pension system for 11 years but only since 2017 (When employment was changed to permanent) on government pension scheme. I should also qualify for UK state pension also. Wife was also working and paying into pension.
I have almost no investments but own Apartment in UK with about 20% left on mortgage. after interest and costs, I'm get about £400 income from this. We also have large mortgage for house in Tokyo suburbs but have 30+ years and 90% value to pay on that!
Can probably afford to invest 20-30,000 JPY per month and occasional lump sums from bonus.

Apologies for the Essay and thanks in advance for any suggestions.

[Wales4rugbyWC23]

Hi there,

Very similar situation to you mid forties married Brit Landlord trying to invest some of the rent in the UK.

You said your Japanese wife lived and worked in the UK? It is possible for her to pay the voluntary national insurance contributions for the state pension, she will need her national insurance number and you will probably need to set up a Gateway account. I know other couples who have Japanese spouses, who are doing this and who are now residing in Japan.

How far are you into paying your mortgage? Did you get the 10 or 13 year mortgage tax credit? Personally, I wouldn't start overpayments until this has finished. I am into my last year now and thanks to really pensioning out with IDECO and other deductibles have paid hardly any national income tax over the last 10 years. Municipal tax is a whole different matter though.

As for investing the rent in the UK, this has been coming really challenging over the last few years. I used to invest a lot with unit trusts when I was single in Japan and now with a house and family in Japan just invest through NISA and IDECO. If you want to open unit trusts if you are residing in Japan you will have to have a UK address. It is possible to do, but you probably need a family member in the UK to help you with it. Also you need to report it to the Japanese tax authorities.

Hope this helps.

[adamu]

There's a lot to decipher there, but will answer these points that I know about:

Does investment income in NISA or equivalent guaranteed to exceed interest cost?

No guarantee at all, your investments could even lose money. But over time, it will probably work out better than mortgage interest. A general rule of thumb is more than five years - if you're looking at less time than that, don't rely on the stock market.

Should I just be paying off mortgage instead of investing?

This is probably your most important question I think. Paying off the mortgage is a guaranteed return. Investing is not guaranteed, but can generate better returns given time. It depends on the rate and how much you're willing to leverage investments. If you're early-40s, you have at least two decades, so it seems that investing is still a good option to me.

If you leave Japan with PR, can you keep paying voluntary pension contributions?

I don't know about the voluntary contributions. But be careful that you don't lose PR by staying out of the country too long. Get a 5-year multiple re-entry permit. It's theoretically possible to extend a re-entry permit (but not the standard 1-year special re-entry permit) from an embassy, but I don't know the details. If the re-entry permit expires while you're out of the country, so does your residency status.

[JimmyJazz]

Thanks for taking the time to read and offer some tips.

I guess what I wasn't clear about is that moving is far from certain and if it happened be in 5 years or more, when the the right job comes up.

I see, I will check the rules about how long you can be away with PR. I understood it was 2 years, which in previous times would not have been a problem, but hard to say how things evolve.

Wales4rugbyWC19, I guess you are referring to Japanese mortgage? I'm not aware of tax credits. The mortgage is still in first year, so will find out about that.

No, Wife only studied and did part time work in UK, so not sure if she can qualify for NI there, but can check.

I do have family and a UK address, so will look in to unit trusts, but feels like the best thing to so with rent in the short term is just to carry on paying off that mortgage.

Thanks Again.

[Wales4rugbyWC23]

Thanks for taking the time to read and offer some tips.

I guess what I wasn't clear about is that moving is far from certain and if it happened be in 5 years or more, when the the right job comes up.

I see, I will check the rules about how long you can be away with PR. I understood it was 2 years, which in previous times would not have been a problem, but hard to say how things evolve.

Wales4rugbyWC19, I guess you are referring to Japanese mortgage? I'm not aware of tax credits. The mortgage is still in first year, so will find out about that.

No, Wife only studied and did part time work in UK, so not sure if she can qualify for NI there, but can check.

I do have family and a UK address, so will look in to unit trusts, but feels like the best thing to so with rent in the short term is just to carry on paying off that mortgage.

Thanks Again.

Japanese mortgage tax credit if you live in a relatively new house/apartment- (don't know the exact conditions) Every year you get 1% of the value of the principal left on your mortgage up to 500,000 yen a year. This will last for 10 or 13 years depending depending when you took out your mortgage. I always get a mortgage statement about November, which I submit when I do my tax return. This amount is then deducted from your national income tax. It does not lower your taxable salary like pension and health insurance contributions and it also does not lower your municipal taxes or health insurance premiums the following year. However, it is nice to receive every March.

Does your wife have a national insurance number?

[kgj]

Hello.
With regard to your own and your wife's tax and (potential) benefits status in the UK, Wales4rugbyWC19's question about having a National insurance NI) number is vital.

Without his number, individuals and the sum of their contributions to the UK social benefits system are not recognized.

I mention this from the experience of having a part-time job while studying in the UK.

My then employer told me he was 'paying my stamp' (NI contributions) and making deductions from my basic pay accordingly.

I was naive and believed him.

When I later signed up for a full-time job with another employer, I / we found out I didn't in fact have an NI number.

Assuming that you and your wife each have a NI record in the UK, you can check your tax and pension status anytime using the HMRC (uk.gov) website.

You should also be able to apply for 'Government Gateway' log-in code facility using a telephone number (landline?) in Japan.

Note: I'm writing this as someone who resides in Japan will soon reach pensionable age in the UK. As a result of Brexit, COVID, etc. the pensions / NI contributions landscape in the UK appears to be shifting all the time, and not necessarily to our (regular UK taxpayers') benefit.

Best wishes

kgj

[Bubblegun]

Hello,
I wonder if anyone has any advice or is/has been in similar situation.

I am new to this but have read the basics and understood what I should have been doing for years but always prevented by uncertainty. Until now I have just put any money I had into paying off a mortgage on small apartment in UK.





Other relevant info:
I am British citizen (early 40s)with permanent residence in Japan. Japanese wife and young child. Wife has lived in UK, so ok with it and also happy to live in Europe.
I have been paying in to Japanese pension system for 11 years but only since 2017 (When employment was changed to permanent) on government pension scheme. I should also qualify for UK state pension also. Wife was also working and paying into pension.
I have almost no investments but own Apartment in UK with about 20% left on mortgage. after interest and costs, I'm get about £400 income from this. We also have large mortgage for house in Tokyo suburbs but have 30+ years and 90% value to pay on that!
Can probably afford to invest 20-30,000 JPY per month and occasional lump sums from bonus.

Apologies for the Essay and thanks in advance for any suggestions.

I am also a UK landlord getting about the same in income as you.
I was going to put all the money into my mortgage, but then I realized, I was paying off a mortgage at 1.75. interest rates which is peanuts compared to the 6% 13 years ago and really I just gave me peace of mind.Which is important I suppose,
But after paying off a large chunk I had a rethink, w"hat If I let the tenants just pay off the whole mortgage/interest and we took the income", we could be quids in,(as they say) put it into, either renovations increasing its value, invest it into the NISA/IDECO if I brought it over. Or We could allow the money to accumulate, in the UK, then when we are ready to buy a house in Japan, (as the prices fall), bring it all over and do buy a used house out of the large city. So that's what we decided to do. keep the money in the UK, and bring it over as an when needed.

Remember..I wouldn't pay more that 35 years national insurance. Anything longer than that doesn't increase you pension,But I do expect the Uk to screw pensioners over by moving the goal posts and I expect class 2 to have changes. ( probably increases) So keep an eye in the news.