financial questions for long-term residents of Japan

[gureo003]

Hello all,
Yes, I'm new here... first post! I'll get to the facts....I'm a US citizen, going on 10 years of living in Japan. Started on JET & afterwards was privately hired by my BOE afterwards. I have a Japanese wife & have had 3 boys born here (they have dual citizenship till 20). Actually, the oldest one will start elementary school here this week! I myself have 'permanent residence' visa status & easily see myself staying & working in Japan until, if not beyond, retirement. At this point in my life, I don't see myself trying for Japanese citizenship, but that may change further down the line if we build a home, etc.

Anyway, I have a few financial questions that I've been wanting advice on for a while now, but hard to find many folks in my situation....all of the foreigners that I know are here short-term.

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First off would be specific to Americans, I guess... about US social security. I came to Japan right after college & had been paying into social security while in the US, but was still about 10 'credits' short of benefits eligibility. I have been claiming the 'Foreign Earned Income Exclusion' on my tax return while in Japan, & havent been paying anything to the US, including US social security (although I have been paying into the Japanese national pension scheme for almost 10 years now).

I'm not too knowlegable in social security affairs, but I do know that the US & Japan finally reached some sort of social security agreement late last year. My understanding of this is that my work hours here in Japan can now count towards my US Social Security, but I don't really understand the details involved. Social Security is seperate from US federal taxes, correct? So, how do I go about claiming credit for my Japanese work hours? Do I have to pay a certain abount of my paycheck to US social security each month? If so, how is that amount determined? Can I stop payments after reaching the minimum credits needed for benefits?

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My next question is dealing with the Japanese national pension. As I said, I have been paying into it for almost 10 years now. From my understanding, if I returned to the US (and stopped working in Japan), I can only claim for a refund of a maximum of 36 months worth of contributions (somewhere in the ballpark of $8,000 USD or so), and I forfeit whatever other monies I had contributed. Is this information correct?

If that is correct, it would be pretty silly of me, with my plans to stay in Japan until retirement, to go & claim a refund on that & waste the extra money I have paid in. To me , it seems that I should just go on contributing & plan on one day claiming the benefits from the Japanese national pension scheme.

If this is the case, does anyone know the details surrounding claiming benefits from the Japanese national pension scheme? How long do I have to pay into it to qualify for benefits? Once I reach the level where I do qualify, do I have to remain in Japan to claim those benefits or if I move back to America, will I still get a benefits check from Japan?

I would hate to think that all of my money that is going into the Japanese pension would be wasted because I didnt meet certain criteria. Any experience or links of where to get more information (especially geared for gaijin) would be greatly apprecaited.

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My last financial matters question is dealing with personal savings, retirement, & education savings. We have been saving money each month from my paycheck, but with no interest accumulating on our Japanese savings
account, it seems like it is little more than stuffing it under the mattress. I have considered wiring money back home to a savings account, but the monthly wire fees take a big bite (even the Japanese post office just jacked up their fees this April) & it seems that whatever gains I could be making are lost in fees.

Does anyone have any advice on ways to build a savings or invest money from (or within) Japan that will actually accrue some gains? Since I am unsure if my retirement will be here in Japan or the USA, I have many concernes about being eligible for any such savings schemes or even claiming from them when elegible.

Also, how about savings for education? Saving up for Japanese public high school for our 3 boys is already scary enough, but I would like to have funds availiable to help all three of them start higher education after high school. The issue again is, where to invest or set up a fund and how to get money to it without losing more in wire fees? Also, do most education savings plans have small stipulations that the student has to go to to a university or college in the same country where the savings is held? I would like my children to have the choice to go to school wherever they decide, be it in Japan, America or othewise.
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Well, I know that I unloaded a big heap full on my first post and that there may not be too many of you out there in a similar situation to offer specific advice, but on the off chance that there is, I would appreiate any advice or links to places where I can find such information.

thanks &
yoroshiku onegai shimasu !!

 

[pipokun]

Once I reach the level where I do qualify, do I have to remain in Japan to claim those benefits or if I move back to America, will I still get a benefits check from Japan?

Yes, you can claim the pension in the US. And 15yrs to go when you are eligible for the basic pension, however, nobody predicts the future in 2050, I mean, when exactly you can receive it, at the age of 65, 67, 70, or even later...

I heard the news, US-Japan mutual agreements on pension scheme, but I don't know the details, either.

 

[ArmandV]

Although I have never worked in Japan, I find this question interesting.

It sounds to me like you want to collect both the Japanese pension and Social Security when you retire. If I were in your situation I would ask, "Which is the better plan?" and concentrate on that one. Most people in the U.S. who have studied Social Security know that you will never get back all that you paid into it. That's why I do support having an IRA or get into a 401K in the U.S.

Does Japan have a similar tax shelter plan like an IRA or 401K? If so, I would look into that. I'd imagine if you voluntarily pay into your Social Security account in the U.S. you may get something back. But you should probably check the Social Security website for possible answers or talk to a Social Security representative if you happen to be visiting the U.S.

 

[Mars Man]

Well, it seems that we do some things in common. My partner is a Japanese national and we have three boys, and, I am originally from the USA.

After I started my business of teaching way back when, I got in trouble with IRS for not making quarterly payments/reports. It is seperate from Income Tax. Well, what we did then, was put it in my wife's name under the family business set-up in Japan, and since I was listed as an employee, I pay no SS, and I don't think I would miss it--if, as pipokun hinted at above, there would be any to recieve, anyway.

I'll check out the other questions later, but they do seem require some info which I don't really have at the moment. AND...I've been here 21 years.

Where in Japan are you? It may be good to fill out your personal information on your public profile page. Talk to you later !!!

 

[Ewok85]

Welcome!

My next question is dealing with the Japanese national pension. As I said, I have been paying into it for almost 10 years now. From my understanding, if I returned to the US (and stopped working in Japan), I can only claim for a refund of a maximum of 36 months worth of contributions (somewhere in the ballpark of $8,000 USD or so), and I forfeit whatever other monies I had contributed. Is this information correct?

Thats correct. No idea why its geared like this, maybe its because they think most foreigners only stay for 3 years (which I guess is probably statistically true). You have to hang around till you are 65 when you will receive your pension.

If this is the case, does anyone know the details surrounding claiming benefits from the Japanese national pension scheme? How long do I have to pay into it to qualify for benefits? Once I reach the level where I do qualify, do I have to remain in Japan to claim those benefits or if I move back to America, will I still get a benefits check from Japan?

A poke around some government sites found this little gem: http://www.sia.go.jp/e/np.html

You pay in for 25 years and when you hit 65 you can claim. (Scroll down a bit).

Does anyone have any advice on ways to build a savings or invest money from (or within) Japan that will actually accrue some gains? Since I am unsure if my retirement will be here in Japan or the USA, I have many concernes about being eligible for any such savings schemes or even claiming from them when elegible.

I'm not too geared in this department (I'm 20! Think I'm saving anything right now? :cracker: ). Either investing in foreign currencies with the bank or sending money back home for higher interest rate accounts seems popular nowadays, its just a matter of getting past those pesky fees that do take a decent chunk. Back home in Australia investing in property has become popular too. Might be worth seeing if you can find an investment/financial advisor and see what they think.

I haven't got anywhere near the experience of some of the older guys on here, but I hope that little bit helps out! Bet you have plenty to offer to JREF and hang around for a while!

 

[gureo003]

Hello all & thanks for the replies !! I went ahead & updated some of my (not too) personal info., but I live in the sticks in Iwate prefecture (really far north in Honshu). I am 33 now and should have thought about this future savings stuff a good while back, but I always figured that I would end up back in the good old 窶｢ﾃ?坂?? When I first came I never thought that i would stay as long as I have, but now, I have a million good reasons to stay & only a handful of exuses to want to go back, so here I am !

My father & friends back home also suggest giving up on US SS, but I can't help but feel that its just like throwing away the money I put into it while I was working in the US, especially if I am only a few credits from being able to claim benefits after retirement, as measely as they may be, for me or my wife.
However, I don't know the specifics involved & how much I would have to pay.
The last I heard from SS was in 2001 & they sent a letter showing my statement. Basically, it says that I need 40 total work credits to qualify for minimum retirement benefits. It showed that I already have 32 credits for the 7 years that I worked at my part-time jobs while in the US (total of $4,200 that I have already paid into SS). Again, I'm not well-versed in all this, but my understanding of these figures is that I only need 8 more work credits to qualify...if I earned 32 credits in only 7 years, I would only need to pay into US SS for about another 2 years before I qualified.

Of course, there are major concerns if SS will even be around when I retire in 30 some years or so, & even if there are benefits then, will it be more than a drop in the bucket.... The majority of the advice is saying to give up on it & invest my money in something else...If I decided to give up on the US SS idea, is there any kind of lump-sum early reimbursement wil US SS like there is with the Japanese pension system to get my money back?

As ArmandV suggested, do any of you know if Japan also has similar tax sheltered plans like IRA or 401K? That may be ideal.

My father & friends back home also suggested investing... my father also says that property is the hot thing now. Honestly, I have many fears about investing, party because of ignorance on my side and partly because of the gamble involved. I also don't have the knowledge / interest to keep up to date on whatever investments I may make & moving the money around to keep it gaining peak. On top of that are whatever limitations / restrictions / fees would be imposed on me for living in Japan while investing in things abroad.

I would feel safer in a conservative investment, even if it paid out less than a high risk over the long run.... just put the money in, check on it every once in a while, & be guaranteed it will still be there when we need it. Again, I lack the knowlege of what my options are here in Japan & being a foreigner here, would like to hear some advice from another foreigner in the same situation rather than ask a Japanese financial planner who may not be aware of such international investment limitations. Mars Man, it seems like you are at where I may be a few years down the line. Are you doing anything special for saving up for retirement? How about your boys education? Any means beyond plain old postal or bank savings accounts to make money on your savings in Japan? I hope it's OK to ask & isnt too personal.

For Ewok85... thanks for the Japanese pension info. Just a guess, but I assume the 3 years max refund is probablly directly linked to the JET program, since it is also supported to the national government & only allows its participants a maximum of 3 years to stay on the program (although limited 4th & 5th year positions are starting to appear). Funny, but I had a friend that went back to Canada after 3 years on JET, claimed his 3 year lump sum payment, came back to Japan a few months later, built it up again & claimed it again after going back to Canada for good. Maybe I should have been trying to take an extended 'vacation' back home every 3 years as well !!

Anyway, thanks to all for your input. If there is any more advice or links, no matter how small, I would really appreciate them, to give me some direction in my seach.

 

[Mike Cash]

My bank (Gunma Bank) recently started a system for investing in mutual funds. There is a mix of foreign and domestic ones, and it can all be done online. Of course, there is no guaranteed return on investment.

Check with your bank to see what investment options they may offer.

 

[pipokun]

As you've already paid 10yr worth premium here, you're qualified t o claim US pension. But once you claim refund of J pension, you're not eligible for the totalization.

Agreement and the Lump-sum Withdrawal Payments for non-Japanese
The Social Security Agreements intend to provide you with the totalized pension benefits usually later in your life. On the other hand, the Lump-sum Withdrawal Payments* is not a pension, but a partial reimbursement of the contribution you had paid to the Japanese pension systems.
PLEASE NOTE that if you receive the Payments based on your coverage period, you can not use the same periods again to apply for the totalization benefits.
http://www.sia.go.jp/e/ag.html
International Social Security Agreement

Double-check the US govenment site.
U.S. International Social Security Agreements