Advice on home purchase + retirement savings

[UnderscoreEX]

I will be 30 years old this year and I am trying to plan for my future, mainly about buying home and retirement. Would you guys be able to help check if I am on the right path and point me in the right direction if I am doing something wrong?


- Live and work in Tokyo and unmarried
- Have an emergency fund of almost 12 months
- Take home pay is at least 300k after tax (~340k if I have my side job work that month).
- Ive been in Tsumitate Nisa for almost 1 year (thanks to your help)
- I can usually save about 80k per month.
- Hoping to get a Software job this year that will increase my pay up to ~6mil p/y but who knows.

With that, there are 3 questions that I think only this forum can help me with:

1) From my quick research, I saw that homes could be around 40 mil in Tokyo, 0.5-1.5% APR with 50-70% as a down payment.
Is this true? Is this even achievable for me?

2) With a paid off home and with the pension included (assuming we get it), I have seen that one would need at least 10mil in savings to comfortably retire. Hopefully more, but at least 10mil is the goal for me. Is this a good goal in reality?

3) Also, would you recommend putting the 80k a month into index funds or saving for a downpayment?

Am I on the right path to retire in Japan? Do you have any advice on this?

Thank you for your help in advance.

[zeroshiki]

Why not just get full value for the loan so you don't have to do a downpayment? The interest rates are such that downpayments aren't very "efficient".

Everything depends on your time horizon. When are you planning to get a house? You're still quite young so there's alot of time to save and invest for you. And 10M is incredibly low for retirement unless you live like a monk. Even the national government has said that 20M above the current Japanese pension is what is considered a safe retirement amount.

[UnderscoreEX]

Why not just get full value for the loan so you don't have to do a downpayment? The interest rates are such that downpayments aren't very "efficient".

From what I saw, the super low interest rate was because of a huge downpayment. If it was a full loan, what are the interest rates you would expect?

Everything depends on your time horizon. When are you planning to get a house? You're still quite young so there's alot of time to save and invest for you. And 10M is incredibly low for retirement unless you live like a monk. Even the national government has said that 20M above the current Japanese pension is what is considered a safe retirement amount.

Yeah that 20 million yen is the number that I saw too. That number is for a married couple, so I just halved it.
Perhaps ill get married but, I was just estimating the amount based on 50% of a couple's retirement.
What number would you recommend for a couple? Is 20 million appropriate?

Thanks for the help

[zeroshiki]

Why not just get full value for the loan so you don't have to do a downpayment? The interest rates are such that downpayments aren't very "efficient".

From what I saw, the super low interest rate was because of a huge downpayment. If it was a full loan, what are the interest rates you would expect?

Everything depends on your time horizon. When are you planning to get a house? You're still quite young so there's alot of time to save and invest for you. And 10M is incredibly low for retirement unless you live like a monk. Even the national government has said that 20M above the current Japanese pension is what is considered a safe retirement amount.

Yeah that 20 million yen is the number that I saw too. That number is for a married couple, so I just halved it.
Perhaps ill get married but, I was just estimating the amount based on 50% of a couple's retirement.
What number would you recommend for a couple? Is 20 million appropriate?

Thanks for the help

You can find a simulator to tell you how much you can get but there alot of people on this very forum who were able to get loans without downpayments. The normal recommendation from Japanese financial planners is to try to get full loans if you can.

I don't have a recommendation since I don't know your life situation. Just look at your monthly costs, add up travel, medical or nursing care or whatever you will need when you get old then simulate it out from retirement until old age. 20M is a good baseline since I assume the government already ran the numbers for a generic Japanese person A.

[RetireJapan]

From what I saw, the super low interest rate was because of a huge downpayment. If it was a full loan, what are the interest rates you would expect?

It will ultimately depend on the bank, but it is common to borrow 100% or more of the home price. I got a 110% mortgage (to cover fees) at 0.5% floating a few years ago.

[UnderscoreEX]

From what I saw, the super low interest rate was because of a huge downpayment. If it was a full loan, what are the interest rates you would expect?

It will ultimately depend on the bank, but it is common to borrow 100% or more of the home price. I got a 110% mortgage (to cover fees) at 0.5% floating a few years ago.

That sounds incredible. I feel a lot more optimistic about buying a home, then. I was preparing to save up for a downpayment.

In your experience, are there any good rules for house pricing or terms that one should be aware of in Japan?

Also, if I have 80k free each month, should that be all put into index funds? Is there a better use for it, if not a downpayment?

[Tokyo]

The famous ¥20million example assumes you get a retirement income of approximately ¥230,000 monthly from contributions paid into the kosei nenkin and kokumin nenkin systems over 40 years. Is that your situation?

And it assumes you live a basic level of retirement without “luxuries” such as overseas travel. For most foreigners here with family and friends abroad, travel is not a luxury but a necessity.

From personal experience I can say that the above figures would not be anywhere near enough to provide an enjoyable retired lifestyle for me but I guess we all have very different ideas about what makes us happy.

[UnderscoreEX]

The famous ¥20million example assumes you get a retirement income of approximately ¥230,000 monthly from contributions paid into the kosei nenkin and kokumin nenkin systems over 40 years. Is that your situation?

I will have by age 65. So, at least there's that.

From personal experience I can say that the above figures would not be anywhere near enough to provide an enjoyable retired lifestyle for me but I guess we all have very different ideas about what makes us happy.

Assuming you are not saying that just to brag about being loaded, does this mean most people are screwed?
Of course, I am only 30 and my salary is going to increase. But, I feel like I am making a lot more money and am more frugal than many foreigners (albeit not proactive foreigners like you all) and many Japanese around me. If 5mil per year is not enough to retire, what is everyone else going to do?
What are the average people making 4mil who are not thinking about retirement going to do?

[RetireJapan]

What are the average people making 4mil who are not thinking about retirement going to do?

The reality, of course, is that everyone is going to do the best that they can with their situation. The more we think about it and prepare, the better (up to a point, we need to enjoy life now as well as get ready for the future).

Some people will have to work longer, some will have cut back on their lifestyle, some will need government or family support.

My own goal is to save and invest more money than we need (our needs are modest) but have transitioned to work I enjoy.

[UnderscoreEX]

The reality, of course, is that everyone is going to do the best that they can with their situation. The more we think about it and prepare, the better (up to a point, we need to enjoy life now as well as get ready for the future).

Some people will have to work longer, some will have cut back on their lifestyle, some will need government or family support.

Maybe I need to get around more mature people, because I see most people are not planning for this at all.


Can I ask your advice for the remaining 80k per month. If there is no need for a downpayment, would you recommend investing it all each month?
What would you do?