RetireJapan

Hello,

I am trying to figure out how much money I need for retirement.
Could someone enlighten me on the taxes I would have to pay in Japan after I retire?
What if my revenues only come from selling assets from my IDECO/つみたてNISA/特定口座?

My original assumption is that I would have no revenues and therefore would not pay local taxes and very low medical insurance (~2,000/month). If younger than 60 I would still have to pay the nenkin (~16,000/month).

Once the pension kicks in, the pension would be considered revenues and I would pay the local taxes and medical insurance based only on the pension amount.

Am I forgetting something? Would the capital gains from IDECO/つみたてNISA/特定口座 be considered an income and impact my taxes?

Thank you

This is an excellent topic, and one that I might try to write into a blog post. My understanding is that selling investments in retirement will not count as income per se, as long as your income isn't large enough to require a tax return, and as long as the assets are held in NISA or tax-withholding accounts.

iDeCo can be considered income if you go over the tax-free allowance (you get tax free allowance up to 15m, and half of anything over that is considered income for that year).

There is also a pension tax-free allowance.

There's another little thing that kicks in when you're older, called kaigo-hoken (介護保険).

This is on top of medical coverage. It will be deducted from pension.



((I sold a bunch of stuff in a taxable account a year ago, taking some gains. While I'm still comfortable having done that, besides the national (lump sum) back in april or so, local taxes and health insurance have been pretty high this year. I may bite the bullet and do the same thing in the next few days.))

captainspoke wrote: ↑Tue Dec 22, 2020 8:59 am There's another little thing that kicks in when you're older, called kaigo-hoken (介護保険).

That starts at 40 though, right? At least I started paying it then. Does it get bigger in retirement? My current monthly bill is 3,410 yen.

RetireJapan wrote: ↑Tue Dec 22, 2020 9:44 am

captainspoke wrote: ↑Tue Dec 22, 2020 8:59 am There's another little thing that kicks in when you're older, called kaigo-hoken (介護保険).

That starts at 40 though, right? At least I started paying it then. Does it get bigger in retirement? My current monthly bill is 3,410 yen.

Now you've made me go and show my ignorance....

I must have been missing that on my 給与明細 for like how many years!?!?!

captainspoke wrote: ↑Tue Dec 22, 2020 10:26 am Now you've made me go and show my ignorance....
I must have been missing that on my 給与明細 for like how many years!?!?!

I think it is a fairly new thing -they implemented kaigo payments for the over-40s a few years ago.

Surely sales or dividends from NISA/IDECO would be tax free as they are tax sheltered accounts? For a Tokutei Koza you would have to pay capital gains on increases in value when you sell but this is not the same as income tax. I think income from Nenkin or company pensions would be taxed as income but if I recall it is at a favorable rate. Not sure about structured insurance products.

One question I have had is whether dividend income or capital gains income is better in retirement here. In Canada dividends are taxed more favorably than capital gains so it makes sense to have high dividend paying stocks. Here it seems there is no tax advantage to dividends as they are taxed the same as capital gains. Is this correct even in retirement?