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Facing up to reality: The Japanese retirement paradox

Japan, August 29, 2017

The Japanese lead the world when it comes to long and healthy lives. Despite this, in the latest Aegon Retirement Readiness Survey they were the least likely to report themselves as feeling healthy and the least ready to retire. Why?

According to the World Bank, Girls born in Japan today can expect to live to 87, boys to 81. Importantly, the Japanese aren't just champions at living long lives, they are also champions at staying healthy for longer.

Japan today has one of the world's oldest and longest-lived populations (26.3 percent of its population is 65 or older). But the Japanese have not always been so long-lived – in 1960, average life expectancy at birth was higher in the US (69.8 years) than Japan (67.7). Japan surpassed the US in 1966 (and hasn't looked back since).

Like many of us, the Japanese may inadvertently still rely on preconceptions formed in their younger years, not realizing fully how much longer their lives will be than the 'old people' they knew in their youth.

Staying healthy

Japan's healthcare infrastructure has been credited with boosting the life expectancy of the Japanese, in addition to their long-term health. Since 1961, the Japanese have enjoyed universal healthcare, including a free annual physical examination (pioneered by Dr Shigeaki Hinohara, who recently died at the ripe old age of 105).

So why don't they feel healthy? Only 38 percent of the Aegon survey respondents from Japan believed their health was good or excellent. According to Ryoji Noritake, President of the Health and Global Policy Institute in Japan, one reason may be cultural: "The Japanese, besides being modest, tend to have low self-esteem. They may not realize how healthy they really are."

Saving for the future

If the Japanese are underestimating their health, are they also underestimating their retirement readiness? In the Aegon Retirement Readiness Index, Japan was bottom of the rankings (4.74 out of 10). Here, it seems, the Japanese may be facing up to reality.

Of the G7 countries, Japan has had one of the lowest household savings ratios since 2010.

Takaoh Miyagawa Aegon Sony Life

Takaoh Miyagawa from Aegon Sony Life points out that of the G7 countries, Japan has had one of the lowest household savings ratios since 2010, and only 20 percent of those surveyed by Aegon believed that they were on course to achieve 75 percent or more of their present earnings in retirement.

Count your blessings

There seems to be a silver-lined cloud hanging over Japan. People are living longer and more healthy lives (despite what they may think), but they don't appear to be saving enough to meet their retirement goals. This is a challenge that all countries and societies are facing, and is by no means unique to Japan. Healthy aging, flexible retirement, and financial planning will all have a role to play in providing a solution. Here again, we may be able to learn from the recently deceased 105-year old Dr Hinohara: if you must retire, do so as late as possible – and, above all, enjoy yourself.