With topics related to savings, such as Japan’s so-called 20 million yen retirement issue, receiving more attention in recent years, many people are wondering how much they should have saved for their own retirement.
Realistically, saving 20 million yen is difficult, but can 8 million yen be considered enough to feel secure in retirement?
In this article, we will explain whether having 8 million yen in savings can reasonably be considered reassuring, along with practical ways to increase your savings from now and recommended asset management approaches.
If you feel uncertain about the amount you have saved, we encourage you to use this article as a reference.
Which age group typically reaches 8 million yen in savings?
The age group most commonly considered to have 8 million yen in savings is typically the late 40s to early 50s.
Even if you are able to save 50,000 yen per month, that amounts to 600,000 yen per year, 6 million yen over 10 years, and only reaches 8.4 million yen after 14 years.
Even if you started working in your early 20s, the earliest you would likely reach that level is around your mid-30s.
However, salaries tend to be lower when people first start working in their 20s, and very few can save as much as 50,000 yen per month.
In addition, if you marry in your 20s or 30s and your family grows, expenses naturally increase, making it entirely possible that you will not be able to set aside 50,000 yen each month.
It is also often said that earning at least 5 million yen a year is necessary to save 50,000 yen per month.
Earning 5 million yen annually from your early 20s is uncommon.
As a result, even if you save steadily each month, reaching 8 million yen in savings may take around 20 years after starting work.
Are 8 million yen in savings enough for retirement?
When preparing for retirement, it cannot be said categorically that 8 million yen in savings is enough to provide full peace of mind.
The amount required differs from person to person.
Some people may feel that while 8 million yen would still require careful budgeting, it would not create an immediate cause for concern.
Because pension income is available in retirement, even if you were to use 50,000 yen per month as a supplement, that would total 600,000 yen per year, which means you could theoretically cover 12 years without major difficulty.
It is also possible that you would not need to supplement your income by 50,000 yen every month for 12 years. If managed well, 8 million yen in savings may be a sufficient amount.
How can you aim for 8 million yen in savings starting now?
Among those reading this article, many likely have not yet reached 8 million yen in savings.
So how can you work toward that goal from this point forward?
Below, we introduce three practical points to help you aim for 8 million yen in savings.
Eliminate unnecessary spending
The first point is to eliminate unnecessary spending.
If you want to save money, the most important thing is not to spend unnecessarily in the first place.
Examples of wasteful spending include being drawn into purchases by reward points or sales promotions.
When people focus on earning extra points, they can easily end up buying things they do not actually need.
Even if a purchase feels like a bargain because of points, that money does not become savings.
Sales can also lead people to buy more than they intended simply because items appear discounted.
Even discounted items still reduce your cash once you buy them.
If you want to grow your savings, avoid unnecessary spending triggered by points or sales.
Review fixed expenses
Fixed expenses are costs that are consistently necessary in everyday life and do not include more variable items such as food or miscellaneous expenses.
These include rent, utilities, water bills, communication costs, insurance premiums, and education expenses.
Reducing food expenses may also matter, but we recommend first reviewing fixed expenses, where the same amount can often be saved each month.
Rent is generally the largest component among fixed expenses.
It may not be easy to review, but taking lease renewal timing and other factors into account can help you decide whether moving would be beneficial.
Replacing appliances with newer models can be effective in reducing utility costs.
That does require spending money upfront, but if utility costs are a concern, it is worth considering a review.
A large share of communication costs comes from smartphone bills.
In recent years, many low-cost mobile plans have become available, making it easier to switch.
However, depending on how you use your service, a major carrier may actually be more economical than a budget option, so compare carefully before switching.
Insurance premiums are often cut relatively easily, but because insurance exists to prepare for unexpected events, we do not generally recommend reviewing it first.
It is more appropriate to review insurance when your family structure or lifestyle changes significantly, such as when purchasing a home or after the birth of a child.
When taking out a housing loan, enrollment in group credit life insurance is generally required, so if the borrower passes away or becomes severely disabled, the remaining loan balance no longer needs to be repaid.
Keep that point in mind as well when reviewing your insurance costs.
Save a fixed amount
To reach 8 million yen in savings, it is important to decide clearly by what age you want to achieve that goal and then save a fixed amount every month.
Many people tend to put aside only whatever money remains at the end of the month, but if you do that, the amount saved will fluctuate every month.
Once you receive your salary, make it a priority to move a fixed amount into savings first.
What asset management methods can help grow 8 million yen in savings further?
If you have already reached 8 million yen in savings and want to increase it further, it may be worth considering asset management as part of your financial strategy.
From here, we will introduce recommended asset management options for growing 8 million yen in savings further.
Time deposit
A time deposit allows you to deposit money that you will not use for a certain period, and it generally offers a higher interest rate than an ordinary savings account.
Once the money is placed in a time deposit, you cannot withdraw it during that period, which helps it grow without being touched.
Tsumitate NISA
Tsumitate NISA is a tax-exempt investment system and an investment option well suited even to beginners in asset management.
It allows annual tax-free investment of up to 400,000 yen for a maximum of 20 years.
Because fees are also low, it is suitable for long-term investing.
iDeCo
iDeCo is a system for building your own retirement pension, and you must decide matters such as the investment method and contribution amount yourself.
It may seem complex, but if used effectively, it offers substantial benefits, such as income deductions and tax-free gains.
Government bonds
Government bonds offer the advantage of protecting principal and can also be purchased with a relatively small amount of capital, starting from just 10,000 yen.
However, because the guaranteed minimum interest rate is only 0.05%, meaningful growth cannot be expected if rates remain at that floor.
Investment trusts
Investment trusts are financial products in which professionals invest in domestic and overseas stocks through various combinations.
Compared with direct stock investing, they provide greater risk diversification, so they are recommended if you want to reduce the risk of losses as much as possible.
Real estate investment
Real estate investment requires a much larger initial investment than other forms of asset management, but in return it offers the potential for larger returns.
If rental income can be generated successfully, it can provide stable income over the long term.
Summary
In this article, we reviewed whether 8 million yen in savings can provide security in retirement, how to build that amount from now, and what asset management methods may help grow 8 million yen further.
It depends on each person’s standard of living, but if 8 million yen is managed carefully, retirement does not necessarily have to be a source of concern.
However, if you want to enjoy a more comfortable lifestyle in retirement or travel frequently, it is more reassuring to save as much as possible.
If you would like to understand how much savings may be appropriate for your situation, we recommend consulting a financial professional such as an FP.
Frequently Asked Questions (FAQ)
Are 8 million yen in savings enough for retirement?
Because pension income alone may leave a shortfall, 8 million yen by itself cannot necessarily be considered sufficient. Growing assets through investment is therefore important.
How should you start asset management with 8 million yen in savings?
A practical approach is to diversify through Tsumitate NISA, iDeCo, and real estate investment so that you can grow assets while controlling risk.
What is the average amount of savings by age group?
A rough median benchmark is about 5.3 million yen for people in their 30s, 7 million yen for those in their 40s, and 10 million yen for those in their 50s.
Can you start real estate investment with 8 million yen in savings?
If you use a loan, it is possible to start investing with 8 million yen in your own capital and potentially earn stable rental income.
