Retirement and pensions

Once you stop working in your 60s, your pension becomes your main income. It is built up by how you worked, and any shortfall comes out of your savings. In the game, pension payments start at 65.

How your pension is determined

Pensions are calculated in two tiers: the National Pension (old-age basic pension) and the Employees' Pension.

• National Pension: The full amount is about ¥68,000 a month (the full old-age basic pension from the Japan Pension Service). It is reduced for any shortfall from 40 years of coverage. People who went to university or had periods without work get somewhat less.
• Employees' Pension: Monthly pay from the years you worked as a regular employee (capped at ¥650,000) is added up, and 5.8% of the total becomes the annual amount. This simplifies the actual earnings-related calculation and is adjusted to come close to the average amounts by sex in the Ministry of Health, Labour and Welfare's Survey on Old-Age Pension Recipients.
• Differences by generation: Benefit levels are set slightly lower for younger generations (Gen Z gets 86% of what baby boomers get; assumption).
• Allowance for survivors' pension: Women who are married at 65 get an extra ¥96,000 a year (¥8,000 a month), averaging out the survivors' pension they would receive after losing their husband (assumption).

People who worked long in non-regular jobs, or spent long periods at home, receive less from the Employees' Pension. The differences in pension amounts on the results screen come from these differences in how people worked.

Retirement age and retirement allowances

At 62, you choose to keep working on re-employment until 65, work until 70, or retire at 62. If you retire as a regular employee, you receive a retirement allowance if your employer has a plan.

In the game, university and graduate school graduates use the university column of this table, and everyone else uses the average of the two high school columns. Changing jobs resets your years of service to 0, so the more often you change jobs, the smaller your allowance. Service under 20 years is not covered by the survey, so the 20–24 year value is scaled in proportion to years of service (assumption).

Some companies have no retirement allowance plan. In the same survey, 74.9% of companies overall have one: 90.1% of those with 1,000 or more employees and 70.1% of those with 30–99. In the game, too, some people get no allowance depending on company size. In the simulation, about 23% of people who retired as regular employees got no allowance, and those who did received about ¥9.4 million on average.

The finances of real elderly households

Many elderly households can't cover monthly living costs with their pension alone and draw down their savings. In the game, too, from 65 on, the gap between your take-home pension and your living costs is subtracted from your savings each year. If your savings run out, your net worth goes negative, which shows up in "Your rank among people born like you" on the results screen.

When your savings run out

In years when income doesn't cover living costs, or savings are about to run out, you cut back. The minimum standard of living is modeled on public assistance (welfare) standards: if you rent, ¥1 million a year for a single person or ¥1.7 million for a couple, plus half the rent; if you own your home, ¥850,000 a year for a single person or ¥1.4 million for a couple. If that still isn't enough, people 65 and over with children move in with their child's family and are supported by them, and those without children go on public assistance. If you can't pay your mortgage on a pension, you sell the home and move into a rental. If you are of working age and fall into debt you can't repay, you clear it through personal bankruptcy. These thresholds are assumptions.

Caring for your parents

Around age 48, a parent may come to need care. You choose to use care services or a facility (costing about ¥4 million), care for them as a family while keeping your job (wearing down your health and spirits), or quit your job to provide care (your income stops, and when you go back to work it tends to be a non-regular job). The costs and the size of the effects are assumptions.

Your ideal funeral, and a living funeral

Around 76, after writing your will, you tell your family how you want your funeral done. You can choose a small family funeral, a traditional funeral, a farewell gathering (a music funeral), a tree burial or scattering of ashes, or a direct cremation (cremation only). People with money to spare (net worth of ¥30 million or more) can also choose a "living funeral," hosting the gathering themselves while still healthy. People who keep up their family's faith, or who come from a temple family, have services conducted according to their religion's customs. When you die, you are sent off the way you wished.

About half of funerals are family funerals and about 30% are traditional funerals, with one-day funerals and direct cremations on the rise. The average cost is a little over ¥1 million (Kamakura Shinsho survey, 2024). The estimated cost for each type and how values shape the choice are assumptions.

Related: Savings and investing / How long you live

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