iDeco for your children

[Jansen]

This was a spur of the moment thing and not something I've thought about too deeply, so consult your accountants and lawyers.

The iDeco regulations were amended in 2017 to allow category 2 participants to join beginning from the age of 15, essentially when they've just finished their compulsory education. So what if I were to employ my children, and pay them the bare minimum to trigger shakai hoken payments + another 23k for their iDeco payments. Assuming they continue through the standard route of 3 years high school, 4 years college and maybe 2 years for a masters. This would give them a good 9 years head start of compounding interest.

65 - 15 = 50 years!
That's ¥2,484,000 that can compound for 40-50years. Assuming it doubles every 7 years, that's ¥17,388,000 after 50 years. That's very close to the amount the pension agency said people needed for retirement. And it's money they can't spend on drugs or whatever young people splurge on nowadays.

From a long term point of view, having to pay an additional 9 years worth of shakai hoken is a small price I'm willing to endure.

Of course, if the little shits quit and become freeters, they're on their own.

References:

https://www.nenkin.go.jp/yougo/tagyo/da ... ensha.html
第２被保険者 - any employee under the age of 65 entered in the kosei/kyosai system.

https://確定拠出年金.net/eligibility-for-participation/

https://www.thebalance.com/what-is-the- ... ney-453756
If you invest money at a 10% return, you will double your money every 7.2 years. (72/10 = 7.2)

https://www.fnn.jp/posts/00046628HDK
老後に2000万円必要!?

[RetireJapan]

That's an interesting idea. iDeCo contributions are based on the type of pension you pay into, and I thought nenkin started at 20.

Shakai hoken requires the employer to enrol and pay half the premiums, right?

If this works it will probably be a much better option than junior NISA

[Bubblegun]

This was something I was specifically thinking about myself.
I'm not sure what the rules are, but if I pay them something......are they allowed to open an IDECO.Do they have to be in shakai hoken? I thought the minimum age limit is 20.
I was actually considering transferring the college fund, or some of it, into an IDECO fund, mainly because this would give it a huge head start over their life time.And I am sure the gov will force the IDECO onto everyone in the coming years.(similar to the UK)
The idea of dropping in 1million yen and depositing 10,000 yen a month would give a return of 61million yen over 45 year.However i was thinking of being a weeeee bit sneaky at getting the kids to pay some rent,(or pay something towards the home) while they live here, and if possible put that contribution away, which if they continued to save would give them a good fund.

At the moment we have put away the kids money away into vanguard, but if they don't go to college I was thinking of taking it out at 20 years old, then transferring it to the same vanguard account but via the IDECO.It's just a pity we loose out of the tax break.
https://www.thecalculatorsite.com/finan ... ulator.php

Although 1 million dollars seemed a lot 45 years ago. I wonder what todays real value of that 1 million is today.
I thought this was interesting as we often think 30 million yen would be a good amount for the future, according to Aso I think it was him). So i did a bit of research.
30 million yen today would be worth about 207,000 pounds, however the problem is the purchasing power of 30 million yen or 207,000 pounds which is going to be drastically reduced in 45 years time.
Here we can see how 1 million dollars today will loose it value over 50 years.So it makes me wonder how much are we really chasing if 30 million yen is the purchasing power equivalency in 45 years time.If it followed the dollar it will loose 2/3rds so the 30 million yen is actually on worth around 10 million yen. I did a we bit of research and i found this calculator
This is a japanese inflation calculator. I entered just for numbers 27 million yen in 1960 aiming to retire 2019. The real target equivalency is 90 million yen. So we really need to aim for 90 million to have the 27 million yen ( in purchasing power equivalency) that the politicians say we need.
OUCH! looks a tall order.
https://www.inflationtool.com/japanese- ... t=27000000.
Here I mentally changed 1970 to today and changed Today to 2060, ( if the averages stayed the same over the long term)

https://www.businessinsider.com/how-muc ... th-2016-11
I liked this one as it uses my favourite chocolate bar to get the point across.
https://www.financialsumo.com/what-will ... ou-retire/

I think this calculator is helpful in showing how much our kids will have to save for the future. 2 man yen dropped in monthly over 45 years,(if they start at 15 years old) with inflation increases at 3% and a return of about 5% would return 92 million yen. So I wonder if the purchasing power of the 92million in 45 year is around 27 million yen mark in todays money. There is no way of telling but i think the average joe thinks 27 million yen sounds a lot TODAY, but in 50 years? Probably not going to be worth that much. I suppose telling the average wife/husband they need to save 27 million is much easier to nudge them into an IDECO than saying you're going to have to save about 90 million which seems impossible.
https://www.thecalculatorsite.com/finan ... ulator.php