RetireJapan

bryanc wrote: ↑Fri Oct 29, 2021 7:02 am think in 2017 it was proposed to change to 68 in uk but hasnt gone into law yet.matter of time i would assume

Apologies for repeating myself but you may have skipped this..

“
https://assets.publishing.service.gov.u ... etable.pdf
Under the Pensions Act 2007 the State Pension age for men and women will increase from 67 to 68 between 2044 and 2046.
There were was talk of that being pulled to 2037 not sure of the status now. But it gives you an idea how long changes could take.
“

couldnt access your link but my info was from below -gov uk page

The proposals
Under the current law, the State Pension age is due to increase to 68 between 2044 and 2046.

Following a recent review, the government has announced plans to bring this timetable forward. The State Pension age would therefore increase to 68 between 2037 and 2039.

Your date of birth How the proposals affect you
On or before 5 April 1970 No change
Between 6 April 1970 and 5 April 1978 Your State Pension age is currently 67. It would increase to between 67 years and 1 month, and 68 years, depending on your date of birth
After 6 April 1978 No change. Your State Pension age remains 68
These proposed changes would have to be approved by Parliament before they are agreed.

Those affected by this proposed timetable will on average continue to spend longer in receipt of the State Pension than anyone reaching State Pension age in the last 25 years.

Read the State Pens

“Under the current law, the State Pension age is due to increase to 68 between 2044 and 2046.”



It’s worth noted that all the other pull-ins put before the government were approved.

I'll be retiring in March 2022, but I plan to delay taking the pension until I'm 70 since I'll continue working part-time for a while. It's true that I might die and not get the full amount I could have if I had taken the pension at 65. But I doubt that I'll regret that if I'm dead. If I live to my nineties (like my mom and grandmother) I would definitely regret not delaying it to get a larger amount.

Clueless wrote: ↑Mon Nov 01, 2021 1:26 am I'll be retiring in March 2022, but I plan to delay taking the pension until I'm 70 since I'll continue working part-time for a while. It's true that I might die and not get the full amount I could have if I had taken the pension at 65. But I doubt that I'll regret that if I'm dead. If I live to my nineties (like my mom and grandmother) I would definitely regret not delaying it to get a larger amount.

That's my kind of thinking. The downside of dying early and not 'getting your money's worth' is less bad than the downside of having a small pension for many decades by living longer than you expected.

RetireJapan wrote: ↑Mon Nov 01, 2021 2:03 amThe downside of dying early and not 'getting your money's worth' is less bad than the downside of having a small pension for many decades by living longer than you expected.

Thumbs up to this.

Ok, it seems like most people are in the camps of drawing the pension at 65 or deferring till later.

The table in the diamond article comparing different scenarios didn't take into account taxation or potential opportunity costs, so I decided to run some calcs to gain some insights. I did just one scenario: a ¥2 million pension at 65 (from kokumin+kousei). This rises to ¥2.84 million if deferred to 70, or ¥3.68 million from 75. Net of tax (national, residential, healthcare, nursing etc., estimated using these sites) the incomes are ~ ¥1.85m, ¥2.5m & ¥3.17m per year respectively.

I considered the case of drawing from 65, then saving or investing the annuities in a nest egg until you reach 75 (or 70). From then, you start using the annuity and drawing down the nest egg to give a monthly income equal to the 75- (70-) level annuity. The simulations show how far you would get before the nest egg is depleted, from which point the deferral option will start paying off.

First up - 65 vs 75: By just saving the annuity as cash until reaching 75 means you will be better off until you hit 89. With cautious investing of the nest egg (e.g. 1% return bonds or deposits), the pay off age moves to 90.5. With these payback ages, it is almost impossible to end up spending decades in retirement with the downside of a smaller pension, as you are unlikely to have decades left.

Using a moderate investment strategy (4% return, e.g. 50/50 split stocks & bonds), the payback age is 99 on average. Note I would not necessarily recommend this strategy. Nothing is not guaranteed and market fluctuations are a real risk. It is just there for fun

Next - 65 vs 70: The argument for deferring to 70 appears more sound in comparison. It means foregoing only 5 years of payments, and the payback for deferring is from ~85 for cash or low risk (1% return) investments. This age is comparable to the expected lifespan at 65 of Japanese men (85), so the change of living years longer than the payback age is much higher. For 65 yo women the expected lifespan is 90.

The payback age with the gung-ho invest your pension option is ~92 (4% return, green line).

So, why did I post this? The point is the downside of living decades longer than expected with only a small pension to live on is not the only risk in play. Living costs in retirement may spike upwards in our final years due to medical or care facility costs. See the discussion in this thread. Taking the pension at 65 then putting it aside until you need it creates an additional large nest egg (millions of yen, as shown by the graphs) that may help sustain these costs through the years when we are statistically most likely to need it.

RetireJapan wrote: ↑Mon Nov 01, 2021 2:03 am

Clueless wrote: ↑Mon Nov 01, 2021 1:26 am I'll be retiring in March 2022, but I plan to delay taking the pension until I'm 70 since I'll continue working part-time for a while. It's true that I might die and not get the full amount I could have if I had taken the pension at 65. But I doubt that I'll regret that if I'm dead. If I live to my nineties (like my mom and grandmother) I would definitely regret not delaying it to get a larger amount.

That's my kind of thinking. The downside of dying early and not 'getting your money's worth' is less bad than the downside of having a small pension for many decades by living longer than you expected.

its a difficult one isnt it....i can understand everyones thinking ,however i could also understand if some people prefer to spend some of their hard earned savings travelling or whatever,whilst they are still healthy enough to do so...in the end,what is the point of getting to 85 with lots of savings?
i understand about healthcare ,but from the elderly relatives i have seen in their 90s before they depart,expensive health care will not make much difference and may just end up prolonging the agony..

Vote in the 2024 poll on this: viewtopic.php?t=4000

bryanc wrote: ↑Tue Nov 02, 2021 7:38 am its a difficult one isnt it....i can understand everyones thinking ,however i could also understand if some people prefer to spend some of their hard earned savings travelling or whatever,whilst they are still healthy enough to do so...in the end,what is the point of getting to 85 with lots of savings?
i understand about healthcare ,but from the elderly relatives i have seen in their 90s before they depart,expensive health care will not make much difference and may just end up prolonging the agony..

Yes, I am in this camp - I think I will want to spend more at 65 than I will at 85. I''ve watched how my relatives and my in-laws have progressed through their 60's, 70's and 80's and I don't think I'll be gallivanting around much in my 80's. Having said that, nenkin is so tiny it won't make much difference.