70-year-old man delays pension for 5 years, endures hardship, only to face a devastating outcome

A 70-year-old Japanese man, identified as Kato Kiyoshi (pseudonym), has expressed deep regret after delaying his pension collection for five years, a decision made with the aim of securing his retirement. Kiyoshi believed that by waiting until age 70 to claim his pension, he would receive a significantly larger monthly payout, enhancing his financial stability in old age.

Initially, Kiyoshi was eligible for approximately 120,000 yen per month from his public pension. Concerned about future medical and long-term care expenses, and despite having savings of around 15 million yen, he opted to postpone his pension. This decision meant an anticipated 42% increase, bringing his monthly income to about 170,000 yen after age 70. To support this plan, Kiyoshi and his wife adopted an extremely frugal lifestyle for five years, cutting back on dining out, entertainment, and even avoiding using air conditioning to save money.

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These 5 years of hardship, what were they for?

Upon finally beginning to receive his pension, Kiyoshi was dismayed. He discovered that his increased pension income led to higher resident taxes, calculated based on his pre-retirement earnings. The following year, the increased pension income further raised the base for calculating resident taxes, national health insurance premiums, and long-term care insurance premiums, resulting in a substantial rise in these costs.

Compounding his disappointment, Kiyoshi learned he had missed out on the "additional pension" (kasei nenkin), a benefit similar to a family allowance for pensioners. This benefit would have provided an additional 400,000 yen annually if he had a spouse under 65. Since his wife is two years younger, he would have been eligible for roughly 1.2 million yen over three years had he started his pension at 65. By delaying until 70, his wife was no longer under 65 when he began receiving payments, rendering them ineligible. This case highlights how surface-level calculations of pension increases can obscure significant financial implications, including tax burdens, increased insurance costs, and the loss of crucial supplementary benefits.

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I kept telling her, it's all for peace of mind after 70. But looking back now, I can't help but wonder, was it really worth it?