Japan

June 7: BEST FROM THE BLOGOSPHERE

June 7, 2021

In Japan, has 70 become the new 60?

Here in Canada, 70 is the latest you can start taking your Canada Pension Plan payments, and a date when you can begin thinking about what to do with your registered retirement savings plan.

But in Japan, according to HRMAsia, it’s the new retirement age – up from age 65.

Companies, the magazine reports, will now be “required to retain workers until they are 70 years old.” The reason for this legislative change, we are told, is two-fold. Due to the fact that Japan has a falling birthrate and an aging population, there’s a labour shortage. The aging population is also driving up the cost of pensions, the article notes.

The legislation’s main focus is allowing workers to stay on the job longer. The old retirement age of 65 is no more, the article says, and legislation permits workers to stay on past the new, higher age limit of 70, or to work in retirement as freelancers.

It’s an interesting decision. Here in Canada, there was talk at one time – and later, federal legislation – that would have moved the start of Old Age Security to age 67, for some of the same reasons the Japanese are citing. While the present government reversed this plan, we are now experiencing some of the same issues Japan is experiencing. It’s something to keep an eye on.

Could we see an era of super inflation once again?

When we tell the kids that we once lived through an era where wage and price controls limited our pay raises to six per cent – and where mortgages and car loans had teenage interest rates attached to them – their eyes doubtless glaze over at this litany of impossible-sounding boomer factoids.

Could the crazy interest rates we saw in the ‘80s ever return?

One U.S. professor says yes. Speaking to CNBC in an article carried in Business Insider, Prof. Jeremy Siegel of Wharton says “I’m predicting over the next two, three years, we could easily have 20 per cent inflation with this increase in the money supply.” The increased money supply Stateside is due to “unprecedented” fiscal and monetary stimulus, he states.

Money supply is up 30 per cent since the beginning of 2021.

“That money is not going to disappear. That money is going to find its way into spending and higher prices,” Siegel states in the article.

“The unprecedented monetary expansion, the unprecedented fiscal support, you know, I think excessive, was first going to flow into the financial markets, into the stock market, and then once we’re reopening, and we’re right at that cusp, it was going to explode into inflation,” he concludes.

When you’re saving for retirement, it’s usually a very long-term deal. You may not starting drawing upon any of your savings until you are 70, and there’s a chance you will still be banking on retirement money until you are in your mid-90s. So a balanced approach, a portfolio that has exposure to Canadian and international stocks, bonds, real estate and other sectors is the way to go to avoid having all your nest eggs in the same basket. If you don’t want to take on nest egg management yourself, rest assured that the Saskatchewan Pension Plan is there to manage things for you. Their Balanced Fund has averaged an impressive eight* per cent rate of return since the plan’s inception 35 years go.

*Past performance does not guarantee future results.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.