Thoughts on National Pension Information: No Need for Cost-Benefit Analysis

As I read through information on the National Pension, I feel that many citizens are being swayed by information that has lost sight of its purpose.

Pros and Cons of the National Pension

The main points of the information are as follows:
・Don't take early payments (at age 60) because the benefit amount will decrease.
・If you delay payments (until age 70), it's profitable if you live past 81.

Most of the information focuses solely on:
・Will I break even?
・How does it compare to receiving it at 65?
・Will I gain or lose?
This is often all that is discussed.

In the first place, I frequently see break-even point graphs like the ones above, but when you discuss it on a net-income basis or take taxes into account, the break-even point shifts even further back. Comparisons are often made between age 65 and 70, and the break-even point is cited as 81 in the graphs referenced. However, since actual life is based on net income, the correct figure when recalculated is 84 years and 1 month.

Since humans cannot decide how long they will live, I think it is a wonderful system that the pension continues to be paid as long as you are alive.

Furthermore, whether the money received can be used meaningfully is more important than anything else. Thinking about the essence of it, I think discussing it in terms of average life expectancy is a bit off the mark.

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Let's Consider Healthy Life Expectancy

Since there is also a lot of information discussing healthy life expectancy, there are some articles that I think are good because they take it a step further.

The healthy life expectancy for men is 72,
and for women it is 75.
(Reference article → Average life expectancy - Healthy life expectancy = Unhealthy life expectancy ○ years)

I position the National Pension not as something to receive just for living expenses to survive, but as something to receive to lead a meaningful life.

Whether you break even or not, that doesn't matter. It has nothing to do with profit or loss. You aren't living just to break even, are you? The number one point is whether you can lead a meaningful life.

In that case,
How can you extend your healthy life expectancy?
How can you enjoy life until that period?

This is where the most effort should be focused.

Continuing a stressful life or living a life of constant frugality and self-denial cannot be good for your health. I don't want to live such a wasted life.

Money should be spent meaningfully before your healthy life expectancy ends.

Specifically,
habits like playing sports,
traveling,
going to the gym,
singing,
going to watch baseball games,
talking with friends,
enjoying time with family,
leisurely reading your favorite books,

and trying to live a stress-free life are, I believe, how you feel the joy of life within your healthy life expectancy. By spending money freely on such uses, your healthy life expectancy will likely increase.

I think we should be discussing which option gives us enough money when we want to use it, rather than arguing about how long we have to live to make the delayed payment date more or less than the age 65 payment.

Whether it's 81 or 84, I think it doesn't matter.

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Early or Delayed Receipt?

I plan to start receiving my pension at age 65. If I had to choose between receiving it early (at 60) or delaying it (at 70), I would choose to receive it early at 60.

I think this way because I can spend the money while I am still healthy. I don't think it would be very meaningful to receive a larger amount once I reach an age where the likelihood of being in poor health is high.

As for why I have decided to start at 65 instead of 60, it is for two reasons: I have sufficient savings in my current state, and my private pension payments begin at age 60.

I repeat, I don't have a mindset of profit or loss, or of breaking even, so I just have this way of thinking. If you are someone who hates losing money more than anything else, please build your life plan based on your own values.

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Allocate All Pension Funds to Entertainment Expenses

I will allocate all of my private pension, which starts at 60, and my public pension, which is paid from 65, entirely to entertainment expenses.

It is difficult to touch money that you have saved, and it is harder to spend than you might think. I feel that liquidating investment products is a high hurdle.

That is why I have defined all pension payments as entertainment expenses. By setting the usage purpose in my household budget in advance, it becomes easier to use them only for entertainment. I position the payment amount as 'easy money'.

Since the pension is paid once every two months, I plan to spend it all within those two months. Doesn't just thinking about it make you excited? The rule is that it must not be used for living expenses. I have imposed a rule on myself that the pension must only be used for entertainment, and I am looking forward to my second life.

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After thinking about my own old age, I chose to consume rather than save when I was young. I thought that would lead to a diversification of hobbies and a more fulfilling life in my later years.

Since that action is equivalent to spending money, it becomes difficult to accumulate savings. I think everyone turns to saving because they can't accumulate money.

Instead of that, the money you save through frugality is negligible. I believe that by believing in your own potential and taking actions to increase your earnings, your consumption will increase, but your income will also increase.

That is what I did.

Even now, I am still spending more than the average monthly living expenses in Japan, so I cannot yet live off my dividend income.

Even so, rather than enduring it and feeling stressed, I plan to carry out what I truly want to do. Though, that is the difficult part, isn't it?

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