I was in a cab in Tokyo last night having a interesting conversation about the recent elections and the future of Japan with a very educated and opinionated cab driver. The conversation turned to the pension system. He told me that he would be retiring soon and because of the of the way that he had done his pension, he would be retiring with a monthly payment less than enough money to pay for room and board. He told me that he was now designing his homeless shack. He figured he could afford an air-conditioner and some real panel, but that the price of the roofing material had gone up so he might have to use those blue plastic sheets. He was serious. He was also considering several different places to locate. He said that until he had found his current cab company employer, he had been homeless so this wasn't new to him.

It was a bit sobering for me. We then discussed how people of my generation should expect none of their pension coming back and we wondered what the average young person was going to do...

22 Comments

My grandfather is 90 and he is currently living on Social Security but he told me about what it was like before the New Deal. We need to remember that a society is judged at how we treat the weakest among us.

Yeah, the situation sucks. I have met some older guys like your cabby here in Tokyo. The thing that they all have in common is that they have all worked hard for 40 years and have had decent jobs but got screwed in the end. One guys company went broke and he owed money on his mortgage, he had to sell his house and take a big loss, his pension does not cover his living expenses. Japan does not want to bring in workers from other countries to boost revenue to the pension system, birth rate at 1.29 kids per couple average, about a third of 20 and 30 somethings are working McJobs rather than put in 60 hours a week and pay back all their salary to the government. I really think Japan's pension system is in deep, deep trouble.

The solution is simple -- have more kids and focus on growing the economy instead of outsourcing everything to the third world.

Tokyo is full of homeless men. You can see them everywhere. It seems rare, however, to see homeless women. Why is that?

Heartbreaking.

The story scared me because I have another a few decades to payback my bank loan, without knowing what I will be dong even five years from now.

If I were him, I'd go the world's lowest cost-of-living country with internet and try to make both ends meet with the pension. If it works, I will be blogging about the story from there.

Jeff: Interesting observations. These people can not pay loans and can not go back to his or her original place. My guess is that more men than women are in charge, held responsible for the unpaid loan, and had to disappear away from the creditors. I thought that tendencies rather apply worldwide, not Japan-specific.


Oooouch... and this is not a reality only in Japan. :\

I think that this is going to be a very large problem, as at the same time as people are living longer and longer, technology is finding more and more ways to replace them. For example, in fifteen or twenty years, maybe less, there may not be any need for cabbies, cabs will probably drive themselves.. (if you doubt this, read "Robotic Vehicles Race But Innovation Wins" in today's NYT http://www.nytimes.com/2005/09/14/business/14robot.html and think about how little time it took for computers to go from expensive data processing tools for big business only, to household appliances)

At the same time, scientists are getting closer and closer to finding the key to aging and mortality.

These developments have seriously earthshattering implications for our scarcity-based economies. Now, wouldn't it be great if we realized it?

Looking long term, there are really only two answers, sanity breaking out all over, or genocide.. Which will it be?

Brian, you say the solution is simple, just have more kids. While that would certainly solve the problem, it is far from simple. Try to talk someone into having another kid so that the nations tax base will enlarge! Having a child is a huge decision and has major, major consequences on a couples life. There have to be real reasons to want children and real resources to take care of them and provide for them. Choosing to have children is an epic responsibility. People in Japan have fewer and fewer children for many reasons. It is expensive, it means families have to share their already small living space with more people, it can influence the careers of the parents, etc. People do not want to make that kind of commitment just so their kids can pay more and more taxes to take care of a broke pension system. The pension system was looted by the politicians and there are no more checks in place now than when the cleaned it out initially.

The only way Japan's birthrate is going up is if the government(local and national) really buck up and provide some strong financial incentives. The catch is, they cannot afford to provide the kinds of incentives they really need to. Did you know that in Japan people have to pay for the delivery of their babies? The typical cost would be between 300,000 yen and 600,000 yen. If there are complications the price can easily double. Congratuations new Mom and Dad, you owe us 10 grand! The government really needs all the money that parents fork over, ward tax, national tax, all kinds of school fees, puchases on all the stuff kids need. You can't really lower tax to the very people who you are trying to get your tax revenue from in the first place without someplace to make up the difference. With a 10% consumption tax looming just a couple of years off, I expect Japan's birth rate will decline even more.

It seems to me that there should be some sort of movement or discussion going on in Japan right now about establishing a charity or other service that can help provide for elderly people who will not have enough pension money to survive. Is anything like that going on?

I live in the U.S., and in the near future we will be facing issues with our pension system, and most of the young people my age are planning on saving more for retirement with the expectation that Social Security will not be enough.

Pensions are scary. I can foresee a time in the UK where there's no state pension at all - the government have been nibbling away at it for years, trying to manouvre us into a position where they can do away with it completely. My Mum's state married woman's pension is 8p a week, because of the fact she's been self-employed and married all her life. Yes, 8p. Doesn't go a long way towards anything, that.

Of course, people think that their National Insurance contributions will go towards their own future pension, but that's not how the system works. NI goes towards paying existing pensions, and we too have a demographic that's putting more strain on younger people to support an increasingly aged population, which is not good either for the earners or the pensioners because both end up getting a raw deal.

I don't have a private pension because, like a lot of debt-ridden 30somethings I can't afford the payments and I don't trust that the money will still actually be there when I retire. There have been so many pension scams the last decade or so that I think few people trust them. Why save money each month is someone else is only going to steal it?

So my pension plan is 'get rich first'. I'm not kidding. It's the only way I'll ever be able to afford to retire. I suppose I could go with 'die first', but that's not really such an attractive proposition. At least I'm lucky enough to be in the position of having intellectual capital to trade on, and being limited only by my own creativity. If I were a cabbie, I'd be screwed.

I am concerned about quality of life in Japan, maybe because I brought up in Tokyo and feel bad mood there.

Koizumi must have had a clear vision of society and future when he says 'break up the LDP'.

I've stayed in Lithuania for a few days recently, and seen very nice atmosphere which is rarely seen in Tokyo.
People were so kind to give us guide of the city on the streets.
Especially students seemed bright and shy. We saw that some female students were hanging together in a park and enjoying chatting.
(offcourse there must be darkside there)

Instead, in Tokyo, female students are always facing sexual pressures and have weak relationship with their friends and families.
There are also many homeless people in Tokyo which situation sometimes reminds me of Bombay.
How do I want to have babies who will sustain the society of the future in such a situation?
Many of my friends have already moved to other countries from Japan and they do not pay for the pension system.

I think that Japan should improve social system, education, politics and etc in order to sustain beauty and quality of Japan.

Thank you very much for this oppotunity to share my feeling and to have your adivce.

Boris: Now you know why I so much fight for the French social systems, the system by repartition. Even if it's not a perfect situation, it's still better than your own private placement which benefits only rich people if no economic catastrophes happen.

The first naive thought I had was if at least everyone could have a very small piece of land with your own shelter where you could retire in case of… something (that doesn't remove natural catastrophes).

My second naive thought was… How many of us still know how to grow vegetables, hunt for mushrooms, etc. I had the chance to have a grand father which knows that, I had the chance to have parents who gave me the love of nature and the experience of it, practical experience. I think I would not be lost in a wild forest. Would I be able to survive, it's still to demonstrate, though it would be the first thing I would do, I would quit the city and go in the wilderness, more likely in a forest.

I think quite a few of us know how to hunt for mushrooms and Canadian's are masters at growing, maybe not vegetables, but they sure can grow!

a lot of countries nearby (hong kong for example) give you tax breaks and other incentives to have babies

overpopulated countries like india give you plenty of incentives NOT to have more than 2 babies

having the japanese relax their immigration norms would be an idea ..

shu- Lithuania has the highest suicide rate in the world .
It's such a dark country /nature and atmosphere and all/ for me. And I am Polish so it's really hard to surprise me with sadness and pessimistic feeling.

Porandojin - thanks for teaching me the fact. So, Japan has also high suicide rate, and Finland where I am now does as well. I need to learn more about the pension and social system. BR

I think people should be discouraged from even thinking of retiring, ever.

Remember that the idea that you could have a society full of relatively active people who don't work for the last 20-30 years of their lives is extremely recent. When Social Security was started, the average lifespan was 62, and the "retirement age" was set at 65. That made sense. They should have indexed it, so the current "retirement age" would be closer to 90 now.

I'm trying to figure out how I can be in a situation where I work until I'm too feeble to work anymore, and then I'll be able to live off savings for the last few years.

Doesn't Japan have a national
old age pension?

Marie

I read a story of a salaried foreigner living in Tokyo who elected to go homeless so he could reach his financial goals within a few years - the rent was to high.

Being homeless has some advantages. A homeless person doesn't need to deal with all the responsibilties and headaches a homed person does for one. It's about the closest thing to real freedom a ordinary man/woman can hope for in a developed country.

Hi,

It is very interesting discussion going here. Regarding having a baby in Japan. I went to City Hall the order day asking a few questions. They explained me everything, but...you still have to pay for delivery and 100% fees for your check up during 9 months pregnancy( 5000-15000yen per visit). I then asked the lady why is that. She said: " Pregnancy is not considered as a sickness, this is voluntary", so I thought: " OK man, you are gonna have a baby??? It is your business WE DO NOT CARE, PAY IF YOU WANT SO MUCH!!!!!!!!" This is Japan. Good news is, that if you have JNHI you get from your Ward Office up to 350,00yen when your kid is born. Unfortunetaly you spent 500,000 for delivery + doctor visits, Sorry, NO RETURN!!. My wife and I have expat health insurance which covers up to 1,000,000yen routine maternity. I`m sure it is enough. J Gov. worry more about old people than young one and future of this country. I and my Japanese wife do not pay here any Pension because we know that we will never get this money back. No wonder that J-Post Bank is the wealthest on the world. People know what they are doing.

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From Joi Ito: I was in a cab in Tokyo last night having a interesting conversation about the recent elections and the future of Japan with a very educated and opinionated cab driver. The conversation turned to the pension system. He told me that he w... Read More

Planning to be Homeless from The Asia Pacific Headhunter
September 18, 2005 8:17 AM

Joi Ito took a ride home last night in Tokyo with a Taxi Driver who is currently planning the design of his next shelter. Pretty sobering stuff in a country that most people think is extremely wealthy. Tokyo is full Read More

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