Spending in retirement poll
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Spending in retirement poll
As a companion to the net worth poll, I wondered what most people anticipate their rough spend per year to be (for your household) in retirement. It's hard to know in advance, of course, but I'm guessing at somewhere around ¥3,500,000 - ¥4,000,000 in a typical year without huge splurges. That's probably actually more than we spend now, but now we have almost no travelling, eating out etc. at the moment.
Edited to add: in today's money terms, I mean, as opposed to guessing inflation adjusted values etc.
Edited to add: in today's money terms, I mean, as opposed to guessing inflation adjusted values etc.
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Re: Spending in retirement poll
I think we could live a perfectly happy life on around 2-2.5m, but expect to spend 2-3 times that assuming no catastrophes.
I calculate our pensions alone (2x nenkin, 1x UK) will come to around 3m a year!
I calculate our pensions alone (2x nenkin, 1x UK) will come to around 3m a year!
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eMaxis Slim Shady
eMaxis Slim Shady
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Re: Spending in retirement poll
Yes, I think I'd be comfortable on 3-4 million but planning a nest egg to allow for more so that I at least have more choices.RetireJapan wrote: ↑Sat Jan 08, 2022 4:07 am I think we could live a perfectly happy life on around 2-2.5m, but expect to spend 2-3 times that assuming no catastrophes.
I calculate our pensions alone (2x nenkin, 1x UK) will come to around 3m a year!
Re: Spending in retirement poll
Just a guess, but could be we spend 5-6 in early retirement if we are travelling overseas a lot, but then as we slow down perhaps 3-4 (assuming no huge healthcare costs).
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Re: Spending in retirement poll
Probably. My older sis relayed the phases of retirement as, "the go-go years, the slo-go years, and the no-go years."
Re: Spending in retirement poll
I was just reading a book mentioned in this webpage
https://www.cnbc.com/2022/01/05/harvard ... -home.html
"Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life" by Laurence J. Kotlikoff, economics professor.
It is written for the US audience, but he suggests in chapter 2 that if you can delay taking your Social Security Benefits / National Pension to age 70, the pension amount is much larger (this is so in Japan as well. See below.) and so a higher withdrawal rate of other funds in early retirement has the benefit of increasing the delayed Pension income in later retirement, leading to an overall increase in the standard of living and reduction of taxes.
https://www.nenkin.go.jp/international/ ... nsion.html
Option of “Early Payment” or “Delayed Payment”
The pensionable age for the Old-age Basic Pension is 65 in principle. However, you may opt to receive pension at whatever age after 60. The pension amount is adjusted depending on the age you start to receive your pension. You may opt to receive lower amount of pension before age 65, or you may opt to receive higher amount after age 65. Specifically, your early pension amount receivable at the age of 60 is 70 % of that for age 65 and your delayed pension amount receivable from the age of 70 or older is 142 %.
He also says,
It’s easy to fall into the trap of thinking that you’ll die on schedule, exactly at your life expectancy. Don’t be fooled. Virtually no one dies on time.
Your life expectancy is a statistical average. You’re not an average. Plan to live to the maximum age. The longer you last, the longer you’ll need to clothe, feed, house, entertain, and maintain yourself.
https://www.cnbc.com/2022/01/05/harvard ... -home.html
"Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life" by Laurence J. Kotlikoff, economics professor.
It is written for the US audience, but he suggests in chapter 2 that if you can delay taking your Social Security Benefits / National Pension to age 70, the pension amount is much larger (this is so in Japan as well. See below.) and so a higher withdrawal rate of other funds in early retirement has the benefit of increasing the delayed Pension income in later retirement, leading to an overall increase in the standard of living and reduction of taxes.
https://www.nenkin.go.jp/international/ ... nsion.html
Option of “Early Payment” or “Delayed Payment”
The pensionable age for the Old-age Basic Pension is 65 in principle. However, you may opt to receive pension at whatever age after 60. The pension amount is adjusted depending on the age you start to receive your pension. You may opt to receive lower amount of pension before age 65, or you may opt to receive higher amount after age 65. Specifically, your early pension amount receivable at the age of 60 is 70 % of that for age 65 and your delayed pension amount receivable from the age of 70 or older is 142 %.
He also says,
It’s easy to fall into the trap of thinking that you’ll die on schedule, exactly at your life expectancy. Don’t be fooled. Virtually no one dies on time.
Your life expectancy is a statistical average. You’re not an average. Plan to live to the maximum age. The longer you last, the longer you’ll need to clothe, feed, house, entertain, and maintain yourself.
Last edited by Tkydon on Sun Jan 09, 2022 8:43 am, edited 1 time in total.
:
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
Re: Spending in retirement poll
I think that expression originates from a book by Michael Stein and it has been confirmed in some of the research supporting the "smile" shape of retirement spending.captainspoke wrote: ↑Sun Jan 09, 2022 4:38 amProbably. My older sis relayed the phases of retirement as, "the go-go years, the slo-go years, and the no-go years."
https://www.kitces.com/blog/estimating- ... ing-smile/
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Re: Spending in retirement poll
Makes a lot of sense. I usually urge people to consider deferring if they can (a regular payment from the government when you are less competent has to be better than juggling mutual funds in a broker account).Tkydon wrote: ↑Sun Jan 09, 2022 8:19 am https://www.nenkin.go.jp/international/ ... nsion.html
Option of “Early Payment” or “Delayed Payment”
The pensionable age for the Old-age Basic Pension is 65 in principle. However, you may opt to receive pension at whatever age after 60. The pension amount is adjusted depending on the age you start to receive your pension. You may opt to receive lower amount of pension before age 65, or you may opt to receive higher amount after age 65. Specifically, your early pension amount receivable at the age of 60 is 70 % of that for age 65 and your delayed pension amount receivable from the age of 70 or older is 142 %.
I think it's going up to 75, so you can get 184% of your base pension if you wait 10 years.
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eMaxis Slim Shady
eMaxis Slim Shady
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Re: Spending in retirement poll
Lots of detail for what I assumed was some kind of cliché or common wisdom. Thanks!TokyoWart wrote: ↑Sun Jan 09, 2022 8:21 amI think that expression originates from a book by Michael Stein and it has been confirmed in some of the research supporting the "smile" shape of retirement spending.captainspoke wrote: ↑Sun Jan 09, 2022 4:38 amProbably. My older sis relayed the phases of retirement as, "the go-go years, the slo-go years, and the no-go years."
https://www.kitces.com/blog/estimating- ... ing-smile/
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Re: Spending in retirement poll
While managing investments later could be a challenge, and I of course see the point, something else that might factor in is 'legacy'. If you spend down early on with more reliance on pension later, there'll likely be less to leave behind.RetireJapan wrote: ↑Sun Jan 09, 2022 9:04 amMakes a lot of sense. I usually urge people to consider deferring if they can (a regular payment from the government when you are less competent has to be better than juggling mutual funds in a broker account).Tkydon wrote: ↑Sun Jan 09, 2022 8:19 am https://www.nenkin.go.jp/international/ ... nsion.html
Option of “Early Payment” or “Delayed Payment”
The pensionable age for the Old-age Basic Pension is 65 in principle. However, you may opt to receive pension at whatever age after 60. The pension amount is adjusted depending on the age you start to receive your pension. You may opt to receive lower amount of pension before age 65, or you may opt to receive higher amount after age 65. Specifically, your early pension amount receivable at the age of 60 is 70 % of that for age 65 and your delayed pension amount receivable from the age of 70 or older is 142 %.
I think it's going up to 75, so you can get 184% of your base pension if you wait 10 years.
And the quality/level of elder care in some countries--that you may have to buy into--may be a factor, too. Given my mother-in-law's situation, assets don't seem to matter here, but income (pension) does. Tho I don't have any plan to leave japan, in the US having significant assets would get you in (possibly to someplace very plush, along with medical services), whereas a solid pension may not.