[For Retirement #09] If retiring at 60, how to bridge the '5 years until pension' | Organizing the options | Record of asset formation planning for retirement | 74
Hello. I am naninu.
I am making plans to enjoy my retirement.
Last time (#08), I compared our household's projected retirement living expenses
against statistical data to verify them.
However, this was about the period 'from age 65'.
Since our household is considering retiring at 60,
there is a 5-year gap of no income lying ahead.
This time, I will organize the options
for how to bridge this blank 5-year period.
The blank 5 years, what is the required amount?
If we add up our household's projected retirement living expenses
for 60 months,
it becomes a substantial sum.
Furthermore, in the year following retirement, resident tax and national health insurance premiums based on the previous year's income will weigh heavily. I am considering an amount that includes a buffer to account for that.
I believe the peak of the retirement fund challenge
is actually these 5 years rather than the period after 65.
There are 5 options
1. Drawing down assets
Covering it with savings and investments accumulated so far. This is the standard path.
Since it would be painful if it coincides with a market downturn,
it is generally considered standard practice to
'keep the 5 years of expenses in cash-like assets'.
2. Bridging with retirement allowance
According to our household's projections,
the retirement allowance alone should cover almost these 5 years,
and there is a calculation that a surplus will remain.
3. Continuing to work (re-employment/part-time)
Even with an income of 100,000 yen per month, that is 6 million yen over 5 years.
The required amount will decrease significantly.
4. Early receipt of pension
If you start receiving it from age 60, a reduction of up to 24% will continue for life.
Our household currently has a policy not to choose this.
5. Side income (earning power)
50,000 yen per month for 5 years is 3 million yen.
More than the amount, I think the peace of mind
that 'income is not zero' is significant.
Our household's strategy
The basic plan is (2).
Since it is expected that the retirement allowance alone will cover almost 5 years' worth,
the savings from (1) can be kept intact without being withdrawn.
On top of that, I will cultivate the earning power mentioned in (5) starting now.
If this goes well,
the 'I have to work' in (3) will change to 'I can work if I want to'.
The more options you have, the stronger you are.
And these options cannot be prepared after turning 60,
but only starting now in my 40s.
Summary
・The amount needed for the 5-year gap is quite large
・Retirement allowance alone can cover almost 5 years,
and the policy is not to use early pension receipt
・Cultivate earning power starting now. The more options, the stronger you are
Next time, I will introduce a framework for thinking about
retirement fund target amounts in three stages:
'Housing, Bridging, and Post-Pension'.
Afterword
Five years without income... that's scary. To make sure that doesn't become a fear, I will start preparing now!
Thank you for reading
this far.
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