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gruffydd

Baby Boomers - Japan

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I have a couple of questions:

(1) When will the the baby boomers' spending power reach its peak

(2) What was the average household income multiple that the average priced Japanese house went to before the crash there.

Gruff

Edited by gruffydd

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The boomers' spending peak is being overshadowed by the need to pay for medical care for aging parents. The Japanese population peaked in 2005 and is now starting to decline overall.

My father-in-law is in a private rest home, keeping my sister-in-law and her family fully occupied with payments. When he passes away, death duties will take a good 40% of his assets.

On the plus side, rents have hardly risen in the last 10 years. I visited Kobe last month and found that small apartments near the station were only about 65,000 yen per month. (Of course, the landlords want about 6 months' of rent in advance, but that is the way they do things in Japan.)

I have found a very interesting website (in Japanese) that is all about "country living". (What Japanese in his right mind would want to live in the countryside!). Check it out

http://www.romando.ne.jp/prg-html/1150.htm

It (item # 1150) is a big, decrepit old farm house (199 square meters) on about 1,000 square meters of land. All yours for 16.5 million yen. A bit of a fixer-upper, but it's on the main island and not too far from civilization.

Depopulation in the rural districts is becoming real problem. Maybe I will find myself a cheap piece of land by the sea in one of the rural provinces and retire. (What Japanese in his right mind would want to live on the coast!) (Can we say, "tsunami"?)

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As I've mentioned on the other thread, I think the debt % above refers to government debt. Japan's household assets are about $14 trillion.

Regarding the baby boomers in Japan, the peak years are from 2007 to 2009 and the group is known as dankai no sedai or cluster generation. Unlike the U.S., the boomers here are much more focused (hence the three years) and retire earlier for reasons I'm not altogether sure of.

On retiring, they'll get huge payouts:

July 18, 2005

Fortunate generation to see 50 trillion yen in benefits

There are believed to be more than 2 million full-time employees who will reach mandatory retirement at age 60 between 2007 and 2009. They are expected to receive retirement benefits of around 20 million yen on average for a total of about 50 trillion yen - a sum equivalent to the total current deposits at major banks. Statistical calculations highlight the significance of that money to the financial sector.

With retirement only a few years away, most boomers born between 1947 and 1949 are already wealthy. According to the Bank of Japan's Public Opinion Survey on Household Financial Assets and Liabilities, households headed by those in their 50s have an average of 15.56 million yen in financial assets, significantly exceeding the 9.81 million yen for households led by those in their 40s, and not much less than the 17.97 million yen for ones in their 60s.

As for financial assets among people in their 50s, the largest group at 13.6% falls into the category of 10 million yen to less than 15 million yen, followed by 30 million yen or more, and then from 20 million yen to less than 30 million yen.

Financial independence

Boomers also have substantial tangible assets. A household survey by the Ministry of Internal Affairs and Communications shows that nearly 90% of boomers own a home. Many people have paid off the bulk of their mortgages and their children have become self-sufficient. When debts are subtracted from savings, in 2004 working families with people in their 50s had 11.36 million yen in net savings. There are clear differences between people in their 40s at 2.09 million yen and people in their 30s with average net deficits of 410,000 yen.

Edited by i_godzuki

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As I've mentioned on the other thread, I think the debt % above refers to government debt. Japan's household assets are about $14 trillion.

Trying to find the old source for the level at the end of the 80's, here's another more recent one.

Household_Debt_Ratio_Income.gif

post-273-1153728609_thumb.jpg

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Trying to find the old source for the level at the end of the 80's, here's another more recent one.

Household_Debt_Ratio_Income.gif

Apologies again. I was confusing debt to GDP with debt to income. I'm thinking another big factor will be who holds the debt and the assets. In Japan, I suspect its pretty well matched--i.e. the folks with the big bubble era debts will be the folks who get fat payouts when they retire etc. In the UK, though, I fear that the folks with the huge debts relative to income are the younger generation who have put all their eggs into getting a mortgage. By contrast, the older generation with higher incomes probably own there own place already or have relatively small mortgages. This is off the top of my head and is underpinned with no stats.

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i_godzuki,

No apologies needed, wish I could find that damn graph. :)

Effectively it has taken nearly 20 years just to stabilize the debt that was created back in the late 80's. I think Japan is slightly different in one way because a lot of the banks got caught up in the fever as well, risking their own assets in the bubble as well to a much larger extent.

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The boomers' spending peak is being overshadowed by the need to pay for medical care for aging parents. The Japanese population peaked in 2005 and is now starting to decline overall.

My father-in-law is in a private rest home, keeping my sister-in-law and her family fully occupied with payments. When he passes away, death duties will take a good 40% of his assets.

On the plus side, rents have hardly risen in the last 10 years. I visited Kobe last month and found that small apartments near the station were only about 65,000 yen per month. (Of course, the landlords want about 6 months' of rent in advance, but that is the way they do things in Japan.)

I have found a very interesting website (in Japanese) that is all about "country living". (What Japanese in his right mind would want to live in the countryside!). Check it out

http://www.romando.ne.jp/prg-html/1150.htm

It (item # 1150) is a big, decrepit old farm house (199 square meters) on about 1,000 square meters of land. All yours for 16.5 million yen. A bit of a fixer-upper, but it's on the main island and not too far from civilization.

Depopulation in the rural districts is becoming real problem. Maybe I will find myself a cheap piece of land by the sea in one of the rural provinces and retire. (What Japanese in his right mind would want to live on the coast!) (Can we say, "tsunami"?)

Yep! My wife is Japanese (although she was born in Hong Kong) but still she is a Japanese citizen.

Sometimes, I think about moving to Japan - Kyoto would be nice - lovely countryside in the surrounding hills - I could probably get a job teaching English too!

My only concern - just how difficult would it be to really retire (or semi-retire) in Japan - honestly?

Lovely country though - nice people and great food!

What are your views?

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Thanks for the info Bubb, Odakyu-sen, Only Me and i_godzuki.

I wonder when UK babyboomers will reach the peak of their spending power?

Edited by gruffydd

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Yep! My wife is Japanese (although she was born in Hong Kong) but still she is a Japanese citizen.

Sometimes, I think about moving to Japan - Kyoto would be nice - lovely countryside in the surrounding hills - I could probably get a job teaching English too!

My only concern - just how difficult would it be to really retire (or semi-retire) in Japan - honestly?

Lovely country though - nice people and great food!

What are your views?

I moved to Japan from the UK in November 2003. My wife is Japanese and we live in Tokyo (funnily enough near a station on the Odakyu-sen railway line). I've been very pleasantly surprised how smooth the transition is, even though I arrived with just a smattering of the language. The countryside might be more tricky but I think Kyoto would be a lovely place to semi-retire too. What I'd love to do (I'm 31 now) is end up living here from October to April and in the UK from May to September. Need to get a bit richer first, mind.

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      • down 5% +
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