Retirement is not an age, but a number.
How much do you need to have saved to continue the lifestyle you want.

The calculation is actually quite simple.
Getting there is harder, but hopefully the information on this website will help you.
Most people are just waiting for government benefits at age 60.
In Japan this will not be much.
Some people have a plan and are also investing to retire at 60.
Other people have realized the power of compound interest and will be in a position to retire at 40 or 50.

Retirement does not mean you quit everything to live in a retirement home and play gold all day.
That would get boring quite quickly.
But it does mean you have enough financial security to do the things you want to do, not the things you have to do.

So how much money do you need to retire?
Firstly you need to create a budget.
How much money do you need to live each month?
Now multiply that by 12 and thats how much you need to live each year.
For example if I need 500,000 each month I need 6M / year to live comfortably.

The standard rate of return for long term investment in good mutual funds is 12%.
This means I could invest a lump some of money and I could take off 12% each year without touching the principle.
Don’t eat the goose that lays the golden eggs!

Realistically you will not want to withdraw 8% / year.
This allows for 2% or so in inflation and 2% for market volatility.

So back to our example, if I need 6M yen / year, this would be the 8%.
The total amount I need invested is 6M divided by 8 times 100, which equals 75M yen.
There, I have my retirement number!

If you would like to have more income in retirement just increase that yearly number.
For example 10M yen / year would 125M invested assuming you take 8%.

As you can see you can also multiply your desired income by 12.5 to see your invested amount needed.

So when can you retire?
If you want to retire in 20 years with 75M invested giving a a 6M / year income, you would need to invest 75,000 / month at 12% return which would give a total of 74.9M yen.

Year Year Deposits Year Interest Total Deposits Total Interest Balance
1 9,000.00 607.00 9,000.00 607.00 9,607.00
2 9,000.00 1,825.40 18,000.00 2,432.40 20,432.40
3 9,000.00 3,198.34 27,000.00 5,630.74 32,630.74
4 9,000.00 4,745.39 36,000.00 10,376.13 46,376.13
5 9,000.00 6,488.65 45,000.00 16,864.77 61,864.77
6 9,000.00 8,453.00 54,000.00 25,317.77 79,317.77
7 9,000.00 10,666.47 63,000.00 35,984.25 98,984.25
8 9,000.00 13,160.68 72,000.00 49,144.92 121,144.92
9 9,000.00 15,971.20 81,000.00 65,116.13 146,116.13
10 9,000.00 19,138.18 90,000.00 84,254.31 174,254.31
11 9,000.00 22,706.80 99,000.00 106,961.11 205,961.11
12 9,000.00 26,728.02 108,000.00 133,689.13 241,689.13
13 9,000.00 31,259.23 117,000.00 164,948.36 281,948.36
14 9,000.00 36,365.11 126,000.00 201,313.46 327,313.46
15 9,000.00 42,118.54 135,000.00 243,432.00 378,432.00
16 9,000.00 48,601.65 144,000.00 292,033.65 436,033.65
17 9,000.00 55,906.98 153,000.00 347,940.62 500,940.62
18 9,000.00 64,138.81 162,000.00 412,079.43 574,079.43
19 9,000.00 73,414.64 171,000.00 485,494.06 656,494.06
20 9,000.00 83,866.88 180,000.00 569,360.94 749,360.94

If you had started at 20 years old you could be retired at 40!

You can also see the minimum amount you would need to invest to make sure you have enough money at retirement.
If you want to retire in 40 years with 125M invested giving a a 10M / year income, you would need to invest just 11,000 / month at 12% return which would give a total of 130.7M yen.

I recommend investing into the iDeco tax free retirement account the full amount of 23,000 yen / month for 40 years at 12% interest.
This would give you a total of 273M yen ($2.5M USD) at retirement giving you an annual income of 21.76M yen ($200,000) / year without touching the investment!

Now you know the principles of investing and retirement, it will be no one else fault if you do not retire a millionaire.