Japan's aging population: challenges for the pension system


Japan's aging population and high life expectancy pose serious challenges to the pension system. The number of residents who have reached retirement age is more than 30 % of the total population, which is more than 38 million people. This leads to the need to revise the pension system and retirement age.

To ensure the financial stability of pensioners in Japan, more than 10% of the country's GDP is allocated to social benefits, including pensions. From 2025, it is planned to raise the retirement age to 65 for both men and women, instead of the previous 60. In addition, it is necessary to have at least 25 years of professional experience in order to retire.

There is a possibility of early retirement, but in this case the amount of pension will be reduced. Pensioners can also increase their pension by retiring later, up to the age of 70, which will result in a monthly increase in payments.

The average pension in Japan is approximately $1 500, which is about 60% of the average salary. However, the minimum pension is about $600 or 40 % of the minimum wage. The value of the pension may be reduced due to income tax or additional sources of income.

For many Japanese retirees, an active life and saving for old age are key aspects of ensuring a decent retirement life. Nevertheless, there is a pension gap between urban and rural populations, with the latter often facing financial difficulties.

As in many countries, Japan's pension system is funded by contributions from working citizens. As the proportion of the elderly population increases and the birth rate declines, the government faces an increasing burden on the pension system. This requires constant updating and adjustment of the pension system.

The computed retirement age in Japan is increasing to match the increasing average age of the population and reduce the burden on the pension system. Increasing the retirement age to 65 also encourages additional retirement savings and extended working life, which can improve the financial situation of the elderly.

The importance of saving for old age to ensure a decent life after retirement is emphasized. Japanese retirees, especially those living in rural areas, often face financial difficulties due to low pension payments.

Thus, addressing the problem of an aging population and the sustainability of the pension system in Japan requires a comprehensive approach that includes changes in the retirement age, incentivizing old-age savings, and supporting the financial well-being of the elderly, especially in rural areas.

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