RetireJapan

I received good news yesterday when I phoned the IDeco support center about the legal change, in effect from May, to extend the age limit from 60 to 65 for making contributions.
The woman, at the bank that handles my Ideco account, assured me that I will be able to resume my contributions from May, as long as I am still contributing to the national pension (Nenkin, in my case).
My 60th birthday was last year, after which my Ideco contributions ceased, and the account has been non-active since. My Nenkin contributions stopped at the same time, but I applied to resume them as a “volunteer member” (任意加入) to age 65.
The support woman told me her office doesn’t yet have the documents I need to apply to resume Ideco, but expects them from March.
So, good news for those of us who want our non-taxable investments for retirement to continue until we actually retire!

Thanks for letting us know! Good news

Hey that's pretty much exactly what I was looking for, the age limit.

I felt that I had a pretty good handle on the personal finance topic until I was asked by my Japanese "friend" let's say, who is turning 60 years old. I am guessing that she has not saved for retirement and I dare not ask.

Does anyone have advice for this situation with a rational conservative approach for someone turning 60 years old, assuming that they are just starting to invest? Would the advice still be to max out the iDeco first (from ages 59 to now 65), then Tsumitate NISA (or regular NISA but likely wouldn't fill the contribution limit), then taxable accounts as per the usual advice?

7-seasons.com wrote: ↑Wed Jan 26, 2022 5:57 am Hey that's pretty much exactly what I was looking for, the age limit.

I felt that I had a pretty good handle on the personal finance topic until I was asked by my Japanese "friend" let's say, who is turning 60 years old. I am guessing that she has not saved for retirement and I dare not ask.

Does anyone have advice for this situation with a rational conservative approach for someone turning 60 years old, assuming that they are just starting to invest? Would the advice still be to max out the iDeco first (from ages 59 to now 65), then Tsumitate NISA (or regular NISA but likely wouldn't fill the contribution limit), then taxable accounts as per the usual advice?

It depends on 1. Their current savings 2. Their living situation and 3. whether they plan to continue working.

The tax-free accounts are a good idea, but at 60 the real question is proper asset allocation.

If she is very low risk 50/50 bonds to stocks might be a good idea. However, there are limited bond options for Tsumitate NISAs, so maybe an 8 assets fund.

Haystack wrote: ↑Wed Jan 26, 2022 8:08 am

7-seasons.com wrote: ↑Wed Jan 26, 2022 5:57 am Hey that's pretty much exactly what I was looking for, the age limit.

I felt that I had a pretty good handle on the personal finance topic until I was asked by my Japanese "friend" let's say, who is turning 60 years old. I am guessing that she has not saved for retirement and I dare not ask.

Does anyone have advice for this situation with a rational conservative approach for someone turning 60 years old, assuming that they are just starting to invest? Would the advice still be to max out the iDeco first (from ages 59 to now 65), then Tsumitate NISA (or regular NISA but likely wouldn't fill the contribution limit), then taxable accounts as per the usual advice?

It depends on 1. Their current savings 2. Their living situation and 3. whether they plan to continue working.

The tax-free accounts are a good idea, but at 60 the real question is proper asset allocation.

If she is very low risk 50/50 bonds to stocks might be a good idea. However, there are limited bond options for Tsumitate NISAs, so maybe an 8 assets fund.

Right I was thinking the same thing - same advice of account priority but different portfolio.

#1: iDeco / DC Plan / Stock matching - pre-tax
#2: Tsumitate NISA or NISA - tax-free gains
#3: Regular taxable investment account with brokerage

Portfolio allocation advice varies widely but I generally like the 25% in each of Stocks, Bonds, REITs, Commodities plan (not sure if there is a name for this portfolio allocation) - this is more achievable with the fund options available in Japan than the All Weather portfolio.

7-seasons.com wrote: ↑Wed Jan 26, 2022 8:20 am Right I was thinking the same thing - same advice of account priority but different portfolio.

#1: iDeco / DC Plan / Stock matching - pre-tax
#2: Tsumitate NISA or NISA - tax-free gains
#3: Regular taxable investment account with brokerage

Portfolio allocation advice varies widely but I generally like the 25% in each of Stocks, Bonds, REITs, Commodities plan (not sure if there is a name for this portfolio allocation) - this is more achievable with the fund options available in Japan than the All Weather portfolio.

Personally, I think commodities are a bad idea for anyone, especially someone looking to retire soon. Have a look at the indexes (INDEXSP: SPGSCI for example and set the chart to Max). REITs are not a bad idea, but at 25% you are way over the market cap.

I say for a newbie, the KISS principle is in play. Keep It Simple

1 Fund solution - Target-date funds or 50/50 funds
2 Funds Solution -. Classic stock-bond portfolio VT/BNDW or VTI/BND - or Emaxis Slim All Country / Emaxis slim Developed Country bonds
3. Funds solution - Emaxis Slim - A. All Country B. Developed REITs C. Developed Bonds

Also, an account with Rakuten or SBI so they can automatically set a percentage sale each month/year to fund their retirement.

7-seasons.com wrote: ↑Wed Jan 26, 2022 5:57 am Does anyone have advice for this situation with a rational conservative approach for someone turning 60 years old, assuming that they are just starting to invest? Would the advice still be to max out the iDeco first (from ages 59 to now 65), then Tsumitate NISA (or regular NISA but likely wouldn't fill the contribution limit), then taxable accounts as per the usual advice?

This has come up a few times for me, with clients and friends/acquaintances.

There really isn't a good answer.

For someone to start investing at sixty, when their time horizon is likely to be limited and their human capital almost exhausted? There is almost no room to make mistakes, and a large chance they will get spooked if (when?) their investments fall in value.

Imagine if we had a bear market for the next ten years. For most of us that would be great, we'd get to accumulate cheap assets. For the person in your example, how long would they watch their money go up in smoke before throwing in the towel?

In Japan, with relatively low inflation, I would tend to recommend that people starting in their 60s try to save as much as possible, work as long as possible, and reduce their living expenses as much as possible. For a lot of people they should just save cash.

Some people may have the temperament and curiousity to learn about investing and implement it successfully, but I'm not confident most people can.

Hi thanks for the good news. It is new to me that you have to contribute to the national pension scheme to be able to pay into IDECO when over 65, so I looked it up. I understand the information on this webpage https://www.aeonbank.co.jp/ideco/special/258/ such that this is only true if you wish to join IDECO for the first time at an age over 65. When you have been contributing to IDECO before and you had to stop contributing, because you became 60 - as is is the case with me - you can join IDRCO again from May this year without paying also into the national pension scheme. At least that is how I understand it the explanation.

Krolontra wrote: ↑Tue Feb 01, 2022 2:31 pm Hi thanks for the good news. It is new to me that you have to contribute to the national pension scheme to be able to pay into IDECO when over 65, so I looked it up. I understand the information on this webpage https://www.aeonbank.co.jp/ideco/special/258/ such that this is only true if you wish to join IDECO for the first time at an age over 65. When you have been contributing to IDECO before and you had to stop contributing, because you became 60 - as is is the case with me - you can join IDRCO again from May this year without paying also into the national pension scheme. At least that is how I understand it the explanation.

I think you are confusing the dates for paying in and collecting iDeCo.
My understanding is that to pay in you must be paying nenkin, basically at least kokumin nenkin. That has not changed.
The age for paying in has been extended from 60 to 65.
The other references to ages beyond that (75) are for extending the time when you can start receiving your iDeCo payments. At least that is my understanding of the changes.