If you’re planning to retire in Japan, you may have already heard of NISA retirement accounts. NISA – short for Nippon Individual Savings Account – is Japan’s solution to the failing pension system. Like the pension systems in many countries around the world, the Japanese pension system has been under more and more strain due to a shrinking working population, smaller tax base, and increased number of pensioners. In an attempt to encourage its workers to invest in private retirements, Japan launched NISA as its version of an incentivized private retirement account. There’s only one problem – many foreign workers in Japan don’t speak Japanese, making NISA less accessible to English speakers.
What Are the Benefits of Having a Retirement Savings Account in Japan?
Many people are tempted to rely on government pension systems for their retirement, or they’re tempted to put off considerations of retirement altogether. Unfortunately, given the small payouts of the Japanese pension system – which are likely to become smaller in the future – relying on this alone makes for a poor retirement planning strategy. Meanwhile, those putting off planning for retirement altogether are missing out on an opportunity to utilize the money they’re making now to ensure their security in the future.
- –Making investments according to your income level and expenses, which means investing as much or as little as you want
- –Taking advantage of compound interest and generating more money over time
- -Many financial institutions offer retirement accounts with diversified investment portfolios, giving you the most appropriate investment options
- -Choosing a retirement account that is tailored to your personal needs
- -You can enjoy the peace of mind that comes with knowing you are securing your future and will not have to worry about money
How Does a NISA Retirement Account Work?
NISA is available to any resident of Japan – native or foreign – over the age of 20. It is also available to those who have a legal or fixed-asset presence in Japan. There are two types of NISA accounts – regular NISA and Tsumitate NISA.
- -Regular Nisa – A regular NISA account allows you to invest up to 1.2 million yen per year for up to 5 years, for a total of up to 6-million-yen investment. A regular account allows investment in listed stocks, funds, ETFs, and REITs. (The 5-year short-term limit may change with future developments, but this is the current maximum.)
- -Tsumitate NISA – A Tsumitate NISA is a long-term account that allows a maximum investment of 400,000 yen per year for up to 20 years, making the maximum total investment 8 million yen over 20 years. A Tsumitate NISA only allows investments in high-cost mutual funds.
Is it possible to open a Japanese NISA in English? While NISA accounts can be opened through most banking and financial security firms available in Japan, English services are limited. There are some online options available, as well, but again these seem to lack English options. However, there are alternative private retirement savings account services open to Japan residents that are available in English.
Are There English Language Retirement Account Alternatives to NISA in Japan?
Although NISA may not be the easiest retirement plan option for English-speaking foreigners in Japan, the good news is that there are many alternatives available. Foreigners in Japan, in particular, benefit from having access to international retirement accounts. An experienced financial advisor can help you navigate the retirement account options available to you based on your language ability and country of origin. If you’re ready to start saving for your future, reach out to a trusted advisor. Remember, the best time to start planning for retirement is now.