This article is about what is the full retirement age in Japan. If you are planning to retire in Japan, you might be wondering what is the full retirement age in this country and how it affects your pension benefits. Retirement age in Japan is a complex and dynamic issue that depends on various factors such as personal choice, employment status, employer's policy, pension benefits, social security system, government policies, economic situation, and demographic trends.
What is the Full Retirement Age in Japan?
The official retirement age in Japan is 65 years old for both men and women. This means that you can start receiving your basic old-age pension from the national social security system when you reach this age, as long as you have contributed for at least 10 years. However, the full amount of the basic pension requires 40 years of contributions, and it is adjusted proportionally for shorter contribution periods.
However, the retirement age in Japan is not fixed and can vary depending on your employment status, your employer's policy, and your personal preference. In fact, many Japanese workers continue to work beyond 65. either by extending their employment contract with their current employer, finding a new job, or becoming self-employed or freelancers. According to a survey by the Ministry of Health, Labour and Welfare, the average retirement age in Japan was 69.1 years old for men and 67.9 years old for women in 2020.
Why Do Japanese Workers Work Longer?
One of the reasons why many Japanese workers choose to work longer is the low level of pension benefits compared to their income and living expenses. The average monthly basic pension benefit in Japan was 66.424 yen (about $600) for men and 70.286 yen (about $630) for women in 2020. This amount is often not enough to cover the basic needs of retirees, especially in urban areas where the cost of living is higher.
Another reason is the ageing population and the declining birthrate in Japan, which pose a serious challenge for the sustainability of the social security system and the economy. Japan has one of the highest life expectancies in the world, with an average of 84.5 years old for men and 88.1 years old for women in 2020. At the same time, Japan has one of the lowest fertility rates in the world, with an average of 1.36 children per woman in 2020. This means that there are fewer young workers to support the growing number of older people who depend on pensions and health care.
To address this issue, the Japanese government has been implementing various policies to encourage older workers to stay in the labor force longer and to increase their productivity and income. One of these policies is raising the retirement age from 65 to 70 years old. In April 2021. the Cabinet approved bills that require companies to retain their workers until they are 70 years old, effectively raising the retirement age from 65 to 70. The bills give companies five options for retaining older workers:
- Raising the retirement age.
- Abolishing the retirement age.
- Allowing employees to work beyond the age limit.
- Outsourcing work to retirees as freelancers.
- Supporting employees who move on to work for non-profits and other entities that provide a public benefit.
The new law requires both companies and employees to reach a consensus on the chosen option. However, some workers may not be eligible for unemployment benefits or union protection if they choose certain options. The government is also planning to reduce benefits for workers aged 60 to 64. but it is not considering raising the starting age for those due to receive their pensions.
The aim of these policies is to increase the labor force participation rate of older workers, which was 66.8% for men and 51.7% for women aged 65 or older in 2020. and to reduce the burden on the public finances and the pension system. However, these policies also raise some concerns about the quality of life and well-being of older workers, who may face difficulties in finding suitable jobs, balancing work and family responsibilities, and maintaining their health and skills.
Bottom Line
In this article, we have discussed what is the full retirement age in Japan. If you are planning to retire in Japan, you should be aware of these factors and plan ahead accordingly.
