Prison & Japanese pensioners

Debbie Harris
March 2023 • 5 min read

Crime wave amongst Japanese pensioners

I read a very interesting article in the news recently about Japan’s elderly committing crimes in order to get themselves sent to prison.

69-year-old Toshio Takata said “I reached pension age and then I ran out of money. So it occurred to me – perhaps I could live for free if I lived in jail”. So he committed a petty theft offence and was sentenced to a year in prison. He has spent much of the last eight years in and out of prison and whilst he doesn’t ‘enjoy’ it; he still receives his pension and so has some money saved for his living expenses when he gets out.

Repeat offending is a way to ‘get back into prison’, where there are three square meals a day and no bills.

What a terribly sad and sorry state of affairs. The state pension in Japan is not enough for a basic quality of life for a retiree and the trend of children looking after their elders waned some decades prior.

“Ultimately the relationship among people has changed. People have become more isolated. They don’t find a place to be in this society. They cannot put up with their loneliness,” says 85-year-old Kanichi Yamada.

What is somewhat ridiculous in all this (aside from elderly folk deliberately getting themselves into trouble) is that it would cost a lot less for the government to build an industrial complex retirement village where people would forfeit half their pension but get free food, free board and healthcare and so on, and get to play karaoke or gate-ball with the other residents and have a relative amount of freedom.

Although this is happening in Japan, we also have a problem here in the UK with the exorbitant cost of living in retirement homes (or care). So much so, that many pensioners here (and in the US where there is a flourishing market tailored specifically to this) are opting to ‘live’ on cruise ships – they get meals, board, company, entertainment, healthcare and they get to see some incredible places along the way – highly preferable to a stint in Wormwood Scrubs!

A film available on your platform of choice starring Michael Caine, Morgan Freeman and Alan Arkin “Going in Style” picks up on a similar theme, though this group have had their pensions stolen through corporate mismanagement. Here is the trailer of the 2017 film directed by Zach Braff.

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Prison & Japanese pensionersJemima Thomas2023-12-01T12:12:36+00:00

Pensioners set to run out of cash

Solomons-financial-advisor-wimbledon-blogger

Pensioners set to run out of cash

The Social Market Foundation released a report yesterday called “The Golden Years – What freedom and choice will mean for pensioners“. This explores the new pension freedoms that were introduced and considers the experience of other nations where this has already happened to see what we might learn.

It will come as little surprise to anyone, that given the opportunity to take money from a pension, many people struggle to make it last for the remainder of their lifetime, yet this is precisely what underpins the point of a pension.

The report points to experience in Australia and the US where similar pension freedoms have been enjoyed. They note three main types of behaviour and problems.

Cautious Australians – who withdraw less than 1% of their pension fund
Quick spending Australians – one in 4 clear out their pension fund by 75
Typical Americans – who withdraw 8% a year

Overspending and pessimism

I’m not going to pretend that this is an easy problem. As a financial planner I have to make lots of assumptions about the future and I typically advise clients that few of them will be accurate, but they are all reasonable, but just as importantly, they are reviewed.

In simple terms, financial planning attempts to ensure that you don’t run out of money. Great financial planning attempts to ensure that you get and keep the lifestyle you want. There are numerous assumptions that I have to make, not least of which is your life expectancy. Most people under estimate this. Pause for a moment. At the risk of boring you… as I say this to clients… if we take a conservative approach to your life expectancy and assume you live until you are 100, your money has to last longer and thus work harder… if we assume you live to say 80, then it doesn’t need to last as long or work as hard… but if you invite me to your 80th birthday party, I’m the least popular person in the room, because once we’ve had a drink, the cake and a bit of a dance, I turn the lights off. That’s it.

OK, you may have other sources of income (State Pension etc) which would continue, but the point is merely to help you grasp the significance of this assumption… which I find seems to work. Importantly we review this (its an educated guess)… the day you die isn’t something that we can easily predict, but we can at least build scenarios into your plan.

The Destitute Pensioner

There’e a new film out which I plan to see as it stars the rather wonderful Maggie Smith. Its called “Lady in the Van” and is on general release on 13th November. Its based on a true story. I’m not sure if this was a lifestyle choice or something that was forced upon her, but it makes for a good script. Without proper financial planning advice, many pensioners are going to run out of money, the only way to properly engage with this prospect is to provide a proper financial plan which includes cash-flow forecasts, without it (as many advisers still appear to be) you are up the creek with the proverbial paddle. Here’s the trailer.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Pensioners set to run out of cashDominic2023-12-01T12:19:52+00:00

NS&I Pensioner Bonds

Her Majesty’s Treasury announced the new rates for the NS&I Pensioner Bonds last week. These look incredibly competitive for fixed interest rate cash deposits (bonds). These will be offered in the new year at some point in January. There will be a 1 year fixed rate of 2.80% and a 3 year rate of 4.00%. There is a maximum investment of £10,000 into each. You can have both (£20,000 in total). The interest will be added at each anniversary.

The World Is Not Enough… well £20,000 isn’t

When comparing Bond rates for cash against market equivalents, they are incredibly good – but clearly restricted to a maximum holding of £20,000 per person, I expect that there will be a high demand and as a result the offer could be withdrawn fairly quickly. Blink and you may miss it.

If you would like more information about this please consider the NS&I website. Remember that this is for cash balances that you can afford to lock away for 12-36 months. If you expect to have this money longer than that, then please consider proper investment advice as despite the fact that these rates are “good by comparison” they would be an unwise use of your money as a long-term investment plan (5 years or more). Cash is for your emergency safety net and planned expenses in the 0-48 month window.

Pensioner Bond

The “Pensioner Bond” is only available to those aged 65 or over… which if you are interested would enable 4 of the living 6 actors that played James Bond, 007 to apply.

Timothy Dalton (70); George Lazenby (75); Sean Connery (84), Roger Moore (87). The current James Bond Daniel Craig is 46 and his predecessor Pierce Brosnan is currently 61. The other Bond story is that the new 007 film “Spectre” is scheduled for release in November 2015.

Dominic Thomas

NS&I Pensioner BondsDominic2023-12-01T12:39:44+00:00