As Japan faces the dual challenges of an aging population and economic strain, more citizens are finding themselves working well into their 70s to make ends meet. With a pension system under pressure and rising inflation, the reality of delayed retirement is becoming the new norm in Japan, a trend that could soon spread to other developed nations grappling with similar demographic shifts.
One such individual is Michie Hino, a 77-year-old who works full-time at an elderly care facility east of Tokyo. She spends her days cleaning and doing laundry for the facility’s residents, many of whom are close to her own age. Despite her age, Hino is part of Japan’s elderly workforce, which continues to expand as more seniors delay retirement due to financial necessity. Her pension of ¥40,000 ($272) per month is far from sufficient to cover living expenses, so she supplements it with earnings from her job, which pays her ¥160,000.
Japan has one of the world’s longest life expectancies, with men living an average of 81 years and women 87 years. This longevity, while a sign of the country’s advancements in healthcare, has put immense pressure on the national pension system. Japan’s situation serves as a case study for other developed countries like China, South Korea, the United States, and various European nations, which are also facing the consequences of aging populations.
The strain on Japan’s pension system has grown acute in recent years, exacerbated by the country’s highest inflation in decades. While the government has traditionally focused on issues like the declining birthrate, the plight of the elderly—who make up a significant portion of the population—is becoming a central topic of discussion. In this month’s ruling party election, candidates are expected to address how rising living costs are disproportionately affecting seniors.
Nobuhiro Maeda, a senior analyst at NLI Research Institute, noted the government’s focus on younger generations, but stressed that issues for the elderly remain critically important. “The government has tended to prioritize youth-related issues, but with the aging population, they must also address the pressing needs of older citizens,” Maeda said.
According to the Organisation for Economic Co-operation and Development (OECD), one in five Japanese citizens over the age of 65 lives in poverty, a figure that outpaces the OECD average of 14.2 percent. This was before inflation began to take hold, further stretching the finances of Japan’s aging population. The average combined welfare and public pension payments amount to ¥144,982 per month, which falls significantly short of covering the typical household expenses for two or more people.
The government, recognizing the growing problem, has taken steps to mitigate the pension crisis. One proposal includes extending the pension premium period by five years, raising the age of eligibility from 60 to 65. In addition, the government has introduced reforms to adjust pension benefits based on fluctuations in prices and wages, though these changes have often led to lawsuits in years when benefits were reduced.
More Read
Despite these measures, many elderly Japanese citizens continue to rely on work to sustain themselves. The labor force participation rate for men aged 65 to 69 has jumped significantly over the past two decades, with 43.3 percent of men in this age group still working in 2023, compared to 29.8 percent in 2003, according to OECD data. This contrasts sharply with the U.S., where only 22.4 percent of men in the same age bracket are employed.
For many, like Hino, work provides not just financial stability but also a sense of purpose. A 2020 survey by Japan’s Cabinet Office revealed that nearly half of elderly workers cited reasons other than money for continuing to work, such as staying mentally sharp and feeling useful to society. “Working helps me stay active and fend off the effects of old age,” Hino said.
However, as more elderly citizens remain in the workforce, the Japanese government is also working to create incentives for private companies to employ seniors, including subsidies for firms that hire workers over the age of 65.
With the world watching, Japan’s experience may offer important lessons for other nations facing the challenges of aging populations. As younger generations increasingly turn to financial planning to safeguard their futures, it is clear that the question of how to support aging citizens in the face of economic uncertainty will become a global issue in the coming years.
