Delaying pension

[goodandbadjapan]

I do understand the point, but couldn't that also be used as a sales pitch for the 'simplicity' of an annuity?

Absolutely. I will certainly be taking a look at moving some of our capital into annuities later, provided I can find reasonably priced ones. I don't fully trust that I will remain compos mentis, and my wife certainly is not prepared to manage our portfolio if something happened to me. Far better to have guaranteed cashflow that would be enough to live on.

Judging when to make the move might be difficult. I'd imagine most people think they are still able to handle most tasks until it is too late, by which time setting up an annuity or whatever might be difficult. I wonder if you can set up some kind of power of attorney stating what you want done when the time comes and giving the authority to someone to make the changes.

[Tsumitate Wrestler]

I do understand the point, but couldn't that also be used as a sales pitch for the 'simplicity' of an annuity?

Absolutely. I will certainly be taking a look at moving some of our capital into annuities later, provided I can find reasonably priced ones. I don't fully trust that I will remain compos mentis, and my wife certainly is not prepared to manage our portfolio if something happened to me. Far better to have guaranteed cashflow that would be enough to live on.

Judging when to make the move might be difficult. I'd imagine most people think they are still able to handle most tasks until it is too late, by which time setting up an annuity or whatever might be difficult. I wonder if you can set up some kind of power of attorney stating what you want done when the time comes and giving the authority to someone to make the changes.

You can

A. set up the Auto-sell function for mutual funds to create cash flow. Custom dividend....
B. You could also take the iDeco as a pension if you are only getting base nenkin.

That would be a pretty set-and-forget.

....

If I see myself slipping and failing my yearly cognitive test (clock faces etc) I will set up A, and double-check that my accounts have permission for my children/spouse to take control.

[RetireJapan]

Judging when to make the move might be difficult. I'd imagine most people think they are still able to handle most tasks until it is too late, by which time setting up an annuity or whatever might be difficult. I wonder if you can set up some kind of power of attorney stating what you want done when the time comes and giving the authority to someone to make the changes.

It's not going to be a complete switch. I can see us using a % of our assets to buy annuities (20%? 30%?), moving some into cash, but leaving the bulk of the money invested.

So age 70 or so (or buy them to start at 70, which should reduce the cost). Will be doing more research on this in a decade or so

[Tkydon]

...Getting a cash transfer every couple of months instead of dealing with an online broker and making decisions about selling might be much easier, particularly as you get older.
...

I do understand the point, but couldn't that also be used as a sales pitch for the 'simplicity' of an annuity?


Tho I'm US and not in the loop on it (and people here are generally savers/investors--prospective retirees, rather than actually being retired), other than the viability of the 4% rule there seems to be little talk about the end game for NISA and ideco. Is it really that challenging to sell as needed, or in a planned way?

NISA is simple to sell anytime you like. Select the Units to Sell and press the Sell Button. No tax, no hasstle.

iDECO is a little more complicated as you can take a Lump Sum at your elected 'Retirement' date, between 60 and 75, taxable as Retirement Lump Sum Income (deduct basic Allowance = Y400,000 for first 20 years and then Y700,000 for additional years, divide by 2, and apply standard marginal Income Tax Rates - the iDECO Provider should calculate and withhold for you.)
Then, you probably also have to take an annuity for the balance, which is then taxable as Miscellaneous Income at you Marginal Tax Rate after Allowances and Deductions.

[Tkydon]

You could select to take the Pension, pay the tax, and set up a parallel Tsumitate NISA to sweep it up and continue DCA Tax Free forever...




The Canadian Discussion of the Early vs Late Debate I mentioned above is here:

https://youtu.be/m9PXPjAQVeg

@ 44:00:00 According to the featured Canadian Financial Planner, due to the different Indexing Values actually used for annual increases to Canadian Pensions vs the annual increase to the monthly amount if the pensioner delays receiving his/her Canadian Pension, Canadian Pensioners should take their Pension earlier, and NOT delay taking benefits until later, as the break-even on delaying taking the Canadian Pension would not be achieved until the pensioner reached 105...

Do the two different indexing values also apply to Japanese Pension?

The 0.7% increase Per Year from 65 is the approximately the same... so 142% at age 70... 184% at age 75 or over...

Would it be even more beneficial to take the 0.6 hit to accelerate to 60 ???
In Japan, if you pull the trigger at 60 you get 76% of the Full 100% 65 amount (discounted at approximately 0.6% per year).

[Tsumitate Wrestler]

You could select to take the Pension, pay the tax, and set up a parallel Tsumitate NISA to sweep it up and continue DCA Tax Free forever...




The Canadian Discussion of the Early vs Late Debate I mentioned above is here:

https://youtu.be/m9PXPjAQVeg

@ 44:00:00 According to the featured Canadian Financial Planner, due to the different Indexing Values actually used for annual increases to Canadian Pensions vs the annual increase to the monthly amount if the pensioner delays receiving his/her Canadian Pension, Canadian Pensioners should take their Pension earlier, and NOT delay taking benefits until later, as the break-even on delaying taking the Canadian Pension would not be achieved until the pensioner reached 105...

Do the two different indexing values also apply to Japanese Pension?

The 0.7% increase Per Year from 65 is the approximately the same... so 142% at age 70... 184% at age 75 or over...

Would it be even more beneficial to take the 0.6 hit to accelerate to 60 ???
In Japan, if you pull the trigger at 60 you get 76% of the Full 100% 65 amount (discounted at approximately 0.6% per year).

We cannot ignore longevity as predicted by age, gender and health. If your spouse is a Japanese women, they may have a significantly longer expected lifespan than a western male.

You need to adjust for this, and make a plan suitable for each party.

I was serious when I said those of use who are obese/diabetic etc should consider taking it early.

[RetireJapan]

Personally this is not a purely financial decision for me. I am not looking to maximise the amount of money I can wring from nenkin, but instead to treat it as a kind of longevity or dementia insurance.

If I happen to die early and 'waste' the pension I could have had, I don't really care (I'll be dead). But if I end up living to 130 for some reason I may be glad to have the larger base pension.

For us I don't think it is going to make much difference (unless something goes terribly wrong we aren't likely to need nenkin either way) but that is how I think about it. If you can afford to take nenkin/pensions late, it might be a good way to diversify, simplify, and insure against living for a long time or becoming unable to manage your finances.

Unlike investments, no one can take your pension away from you (well, the most they can take is two months' worth, then you get more two months later).

[Wales4rugbyWC23]

I assume you are talking about the Japanese Pension?

And I assume you do not have a full 480 months at age 60 to qualify for the full Pension at 65?

If you reach 60, you can go to the Pension Office and apply to pay voluntary contributions to get your number of contributions up by another 60 months... You cannot pay voluntary contributions past age 65.

You can see the Mark-Down Factor if you decide to take the Japanese Pension before 65 (between 60 and 64 + 11 months) based on the number of Qualifying Months at the Time here:
(You will receive the Qualified Pension x (1 Minus Discount Factor shown)
https://www.nenkin.go.jp/service/jukyu/ ... 21-01.html

You can see the Mark-Up Factor if you decide to take the Japanese Pension ater 65 (between 65 + 1 month and 75) based on the number of Qualifying Months at age 65 here:
(You will receive the Qualified Pension x (1 Plus the Mark-Up Factor shown)
https://www.nenkin.go.jp/service/jukyu/ ... 21-02.html

There was some discussion on the Rational Investor Podcast some time ago at the end of one of their episodes asking the same question for Canadian Retirees, and based on different factors for the Mark-Up vs Cost-Of-Living adjustments, I think they came to the conclusion that for Canadian Retirees it did not make sense to delay receiving the Canadian Pension.

I think you'll find reference to the video in 'Recommended Videos'

I think this the Japanese state pension that everyone is commenting about which I think if you were to pay the full 480 months you would get the jaw-dropping amount of just over 60,000 yen per month. Hardly worth delaying it for a few thousand yen more. I don't see it either increasing substantially. The British state pension, on the other hand's voluntary contributions are worth more than their weight in gold.

[RetireJapan]

The British state pension

You can also defer the UK state pension. Same arguments apply.

[Tkydon]

I assume you are talking about the Japanese Pension?

And I assume you do not have a full 480 months at age 60 to qualify for the full Pension at 65?

If you reach 60, you can go to the Pension Office and apply to pay voluntary contributions to get your number of contributions up by another 60 months... You cannot pay voluntary contributions past age 65.

You can see the Mark-Down Factor if you decide to take the Japanese Pension before 65 (between 60 and 64 + 11 months) based on the number of Qualifying Months at the Time here:
(You will receive the Qualified Pension x (1 Minus Discount Factor shown)
https://www.nenkin.go.jp/service/jukyu/ ... 21-01.html

You can see the Mark-Up Factor if you decide to take the Japanese Pension ater 65 (between 65 + 1 month and 75) based on the number of Qualifying Months at age 65 here:
(You will receive the Qualified Pension x (1 Plus the Mark-Up Factor shown)
https://www.nenkin.go.jp/service/jukyu/ ... 21-02.html

There was some discussion on the Rational Investor Podcast some time ago at the end of one of their episodes asking the same question for Canadian Retirees, and based on different factors for the Mark-Up vs Cost-Of-Living adjustments, I think they came to the conclusion that for Canadian Retirees it did not make sense to delay receiving the Canadian Pension.

I think you'll find reference to the video in 'Recommended Videos'

I think this the Japanese state pension that everyone is commenting about which I think if you were to pay the full 480 months you would get the jaw-dropping amount of just over 60,000 yen per month. Hardly worth delaying it for a few thousand yen more. I don't see it either increasing substantially. The British state pension, on the other hand's voluntary contributions are worth more than their weight in gold.

Y60,000 per month, or fraction thereof, is only if you are only covered by the Basic Pension - Kiso Nenkin
https://www.nenkin.go.jp/international/ ... nsion.html

If you were in employment, then you are probably covered by the Employee's Pension Insurance - Kosei Nenkin, which pays out a Fixed Amount Portion equivalent to the Basic Pension above, Plus a Remuneration-Related Portion, related to your Average Standard Monthly Remunerations and Standard Bonuses in April 2003 and later, Plus Additional annual benefits if you have a Dependent Spouse or Dependent Children
https://www.nenkin.go.jp/international/ ... loyee.html