Advice for single mum re: iDeCo

[Roger Van Zant]

Acquaintance of mine wants to start an iDeCo or t-NISA so as to have a bit of money in old age.
The local bank she uses is trying to get her to buy some awful fund.
I said I would look into helping her set up a Monex account so she has access to the eMaxis Slim All Country.

Pertinent information:

- 33 year-old Japanese national
- single mum of one fourteen year-old child
- declares yearly that she earns under 400,000 yen to the tax authorities
- gets money from the government as a single mum (not sure how much)
- gets 17,000 yen per month from the ex-husband
- does some cash in hand jobs but does not declare this (or all of this) to the tax authorities (cleaning job, plus also has a Thai massage/yoga studio in one room of her rented house)
- can afford to pay in about 10,000 per month
- very little savings
- I think she pays 国民健康保険 and/or 国民年金 at the moment, as a single mum (but she gets a rebate so her contribution is almost zero, I believe)

My questions:

① Which is preferable for her? iDeCo or t-NISA?
② When she signs up, should she choose 特定 or 源泉徴収票あり etc., (other option?) for the type of account?
③ Does Rakuten offer eMaxis Slim All Country for iDeCo? I believe it does for t-NISA. (She already has a Rakuten bank account)

Any help would be appreciated.
Thanks!

[RetireJapan]

Acquaintance of mine wants to start an iDeCo or t-NISA so as to have a bit of money in old age.
- declares yearly that she earns under 400,000 yen to the tax authorities
- can afford to pay in about 10,000 per month
- I think she pays 国民健康保険 and/or 国民年金 at the moment, as a single mum (but she gets a rebate so her contribution is almost zero, I believe)

My questions:

① Which is preferable for her? iDeCo or t-NISA?
② When she signs up, should she choose 特定 or 源泉徴収票あり etc., (other option?) for the type of account?
③ Does Rakuten offer eMaxis Slim All Country for iDeCo? I believe it does for t-NISA. (She already has a Rakuten bank account)

Any help would be appreciated.
Thanks!

Sounds like she is not eligible for iDeCo (need to be paying full kokumin nenkin to qualify).

I would recommend tsumitate NISA this year, and then the new NISA next year as a more flexible option. She'll still have access to the funds if she needs them later on.

Would recommend saving up some cash for emergencies as well.

The default option for taxable account on Ratkuten is 特定口座源泉徴収あり, and that is fine. She won't be using it unless she maxes out her NISA account, and it doesn't sound like she is going to do that.

[beanhead]

③ Does Rakuten offer eMaxis Slim All Country for iDeCo? I believe it does for t-NISA. (She already has a Rakuten bank account)

No, they have the Vanguard fund, which is similar, but not quite the same.

[Roger Van Zant]

Thank you for these responses!

[TokyoBoglehead]

Tnisa + 新しい nISA might be better.

Sounds like she may need access to the funds.

I hope she started with an emergency fund.

[Roger Van Zant]

Tnisa + 新しい nISA might be better.

Sounds like she may need access to the funds.

I hope she started with an emergency fund.

Yeah, I also told her this.

[Roger Van Zant]

Acquaintance of mine wants to start an iDeCo or t-NISA so as to have a bit of money in old age.
- declares yearly that she earns under 400,000 yen to the tax authorities
- can afford to pay in about 10,000 per month
- I think she pays 国民健康保険 and/or 国民年金 at the moment, as a single mum (but she gets a rebate so her contribution is almost zero, I believe)

My questions:

① Which is preferable for her? iDeCo or t-NISA?
② When she signs up, should she choose 特定 or 源泉徴収票あり etc., (other option?) for the type of account?
③ Does Rakuten offer eMaxis Slim All Country for iDeCo? I believe it does for t-NISA. (She already has a Rakuten bank account)

Any help would be appreciated.
Thanks!

Sounds like she is not eligible for iDeCo (need to be paying full kokumin nenkin to qualify).

I would recommend tsumitate NISA this year, and then the new NISA next year as a more flexible option. She'll still have access to the funds if she needs them later on.

Would recommend saving up some cash for emergencies as well.

The default option for taxable account on Ratkuten is 特定口座源泉徴収あり, and that is fine. She won't be using it unless she maxes out her NISA account, and it doesn't sound like she is going to do that.

So even if the government is paying her kokumin nenkin on her behalf (in the form of rebates), she still does not qualify for an iDeCo?
She has to be paying kokumin nenkin all by yourself to be eligible?

[RetireJapan]

So even if the government is paying her kokumin nenkin on her behalf (in the form of rebates), she still does not qualify for an iDeCo?
She has to be paying kokumin nenkin all by yourself to be eligible?

Yes, it is a requirement for iDeCo to be paying into nenkin. If you qualify for a reduced payment due to financial difficulties or low income you cannot contribute to iDeCo.

I guess the thinking is that if you have spare money to invest in iDeCo you could pay your nenkin premiums.

[adamu]

iDeCo comes with costs and admin hassle too when her situation changes. Considering one of the biggest benefits is the income tax break, she would probably be getting all the downsides and only some of the benefits.

Better to go with Tsumitate NISA.

[Billy]

I was going to say the same thing as Adamu, one of the main benefits of iDeCo is to lower your taxable income, which sounds like it would not benefit her at the moment. I think t-NISA would probably suit her best for now.