Japanese people are living longer, but with a struggling pension system and the highest inflation in decades, more are delaying retirement until their 70s or later to make ends meet.
Michie Hino is one of them. She works at an elderly care home east of Tokyo, where she spends eight hours a day cleaning the facility and washing laundry even though she is 77 years old herself. She is part of the workforce supporting Japan’s growing ranks of aged and infirm.
Her monthly pension is just ¥40,000 (US$281), far from enough to cover her expenses. She earns ¥160,000 from her work to help pay for basic needs and enable her to save a little.
Japan has some of the longest lifespans in the world, with men living an average of 81 years and women 87 years. This longevity strains the nation’s pension system, making it a case study for other developed countries with similar demographic trends.
The issue would likely be a central theme in Japan’s ruling party election this month, with candidates looking to address how rising living costs affect voters, especially older people. The election would determine who replaces Prime Minister Fumio Kishida, who is stepping down due in part to declining support over persistent inflation concerns.
“There’s a tendency for the government to prioritize issues for the youth, such as the declining birthrate,” said Nobuhiro Maeda, a senior analyst at NLI Research Institute. “But issues for the elderly remain extremely important.”
Japan’s experience with its pension system offers important lessons for policymakers in China, South Korea, Europe and the US, all of which are grappling with similar aging demographics. However, Japan’s challenges are more acute, as its population is already much grayer than in these other regions.
According to the Organisation for Economic Co-operation and Development (OECD), about one in five citizens in Japan aged 65 and over are living in poverty compared with an OECD average of 14.2 percent. That was before inflation took hold in Japan for the first time in more than a generation.
Few can hope to live on pensions alone. The average for combined welfare and public pension payments is ¥144,982 per month, little more than half the amount that households with two or more people spent on living costs in June. The estimated average pension payment in the US was US$1,907 as of January, US Social Security Web site data showed.
Hino enjoys her work at Reikouen in Chiba Prefecture, east of Tokyo, because of the stimulation it provides, which helps her fend off the ravages of old age. She also needs to keep working to pay the bills, especially now that consumer prices have risen by 2 percent or more for more than two years.
“Everything seems more expensive now,” she said. “Every time I go shopping, the prices are getting higher.”
A report published by the Financial Services Agency in 2019 triggered a wave of anxiety with its conclusion that citizens would need up to ¥20 million in savings to supplement pensions. Amid the furore, then-Japanese minister of finance Taro Aso effectively retracted the report, saying it had caused “misunderstanding” and it was possible to live on public pensions.
Concerns continue to simmer as Japan’s public pension system sees dwindling inflows and rising outflows. In the past two decades, the number of those paying into it has fallen by about 3 million, while the number of recipients has risen more than 40 percent, Japanese Ministry of Health, Labour and Welfare data showed.
The government, with a debt load more than twice the size of the economy, allocated about 34 percent of this year’s national budget to welfare, up from 20 percent in 2000. With resources limited, the government is looking into reform steps that would include extending the pension premium period by five years to age 65.
Since 2004 administrators have made annual tweaks to benefits depending on prices and wages. They have faced lawsuits in years that resulted in cuts.
Against that backdrop, the government has created incentives aimed at shifting more of the burden to the private sector. The labor ministry is seeking billions of yen to fund initiatives including job placement assistance for seniors and the provision of gear including assistive suits as part of next year’s budget.
To coax companies to keep elderly people employed, the government is already providing subsidies to firms employing those aged 65 and older.
Japanese already work far beyond the age when their peers in other developed economies have decided to take it easy. The labor participation rate for men between ages 65 to 69 and 70 to 74 has jumped. For the latter group it rose to 43.3 percent last year from 29.8 percent two decades earlier, according to data compiled by the OECD. The corresponding figure in the US was 22.4 percent and 17.3 percent for the OECD average country.
If there is an upside to working longer, it is the sense of purpose and community that comes with it. Nearly half of elderly workers cited factors other than money as their main incentive, according to a Japanese Cabinet Office survey in 2020. Some wanted to make use of their skills, while others said they felt working helped them stay healthy.
“Senior workers are thanked by their employers and customers, which gives them a sense of being useful to society,” said Fumio Murazeki, president of Koureisha, a company that dispatches senior workers. The average age of staff registered with the firm is 72.1.
Still, more needs to be done to help people get by, said Maeda at NLI Research Institute. He cited a Cabinet Office survey of those aged 65 and older that showed more than 80 percent of respondents felt their household budgets were tight. “Many elderly are struggling,” he said.
As they read the writing on the wall, more younger citizens are turning toward financial planning to build nest eggs. That has increased consultations at Kinyu Joshi, a company that conducts financial seminars targeted primarily at younger women. “Everyone has a certain degree of concern about the pension system,” Kinyu Joshi chief executive officer Mariko Suzuki said.
The share of equities and investment trusts in Japan’s household assets rose to a record 19.7 percent at the end of March, according to Bloomberg calculations based on the Bank of Japan’s quarterly flow of funds data released in June.
That is still relatively low by global standards, but the government’s tax-free investment program introduced in 2014 continues to spur more interest from people like Asami Masuda, a 35-year-old mother of one who began investing six years ago.
“I was worried about what happens when I’m older,” Masuda said. “Investing has given me peace of mind.”
Women have it especially hard in Japan when they near retirement age. Among senior single women, an estimated 44 percent live below the poverty line, according to an estimate by Aya Abe, a professor at the Tokyo Metropolitan University.
To maintain pension benefits the government might have to formally prolong the working lives of its citizens, said Naohiro Yashiro, a visiting professor at Showa Women’s University.
“If benefits are reduced, people will have a hard time making ends meet,” Yashiro said. “The most reasonable approach would be to set a later starting age for receiving pension benefits.”
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Congratulations to China’s working class — they have officially entered the “Livestock Feed 2.0” era. While others are still researching how to achieve healthy and balanced diets, China has already evolved to the point where it does not matter whether you are actually eating food, as long as you can swallow it. There is no need for cooking, chewing or making decisions — just tear open a package, add some hot water and in a short three minutes you have something that can keep you alive for at least another six hours. This is not science fiction — it is reality.
A foreign colleague of mine asked me recently, “What is a safe distance from potential People’s Liberation Army (PLA) Rocket Force’s (PLARF) Taiwan targets?” This article will answer this question and help people living in Taiwan have a deeper understanding of the threat. Why is it important to understand PLA/PLARF targeting strategy? According to RAND analysis, the PLA’s “systems destruction warfare” focuses on crippling an adversary’s operational system by targeting its networks, especially leadership, command and control (C2) nodes, sensors, and information hubs. Admiral Samuel Paparo, commander of US Indo-Pacific Command, noted in his 15 May 2025 Sedona Forum keynote speech that, as
In a world increasingly defined by unpredictability, two actors stand out as islands of stability: Europe and Taiwan. One, a sprawling union of democracies, but under immense pressure, grappling with a geopolitical reality it was not originally designed for. The other, a vibrant, resilient democracy thriving as a technological global leader, but living under a growing existential threat. In response to rising uncertainties, they are both seeking resilience and learning to better position themselves. It is now time they recognize each other not just as partners of convenience, but as strategic and indispensable lifelines. The US, long seen as the anchor
Kinmen County’s political geography is provocative in and of itself. A pair of islets running up abreast the Chinese mainland, just 20 minutes by ferry from the Chinese city of Xiamen, Kinmen remains under the Taiwanese government’s control, after China’s failed invasion attempt in 1949. The provocative nature of Kinmen’s existence, along with the Matsu Islands off the coast of China’s Fuzhou City, has led to no shortage of outrageous takes and analyses in foreign media either fearmongering of a Chinese invasion or using these accidents of history to somehow understand Taiwan. Every few months a foreign reporter goes to