Life Planning for Staying with the Company After Retirement | Systems to Know and Survival Methods for the Senior Generation
Even if you love working at your company and find it fulfilling, we live in an era where you must think about the future.
This is because, in modern times, retiring at age 60 does not necessarily mean you can start receiving a pension immediately.
Normally, pension benefits begin at age 65, so if you retire at 60, managing living expenses during that gap becomes a critical issue. How people spend this period varies from person to person.
Some may dip into savings, start a part-time job, or even start their own company upon retirement.
However, among the many options, the one most people consider is likely continuing to work for the company they served until age 60.
This article introduces life planning for those who choose to remain with their company after retirement.
How Much Do You Need for Living Expenses During the Five Years from Retirement to Receiving a Pension at 65?
When considering a post-retirement life plan, you first want to know exactly how much is needed for the five years until pension benefits start.
According to the 2022 Family Income and Expenditure Survey data on the government statistics portal "e-Stat," living expenses for these five years are generally estimated at approximately 17.22 million yen.
Breaking this down, the required monthly living expense is approximately 287,000 yen.
The specific breakdown includes the following items:
Food: Approx. 79,865 yen
Housing: Approx. 10,979 yen
Utilities: Approx. 20,959 yen
Furniture and household goods: Approx. 12,751 yen
Clothing and footwear: Approx. 8,298 yen
Medical care: Approx. 18,885 yen
Transportation and communication: Approx. 34,008 yen
Education and recreation: Approx. 29,403 yen
Other consumption expenditures: Approx. 55,426 yen
For instance, in this estimate, housing costs are about 10,000 yen, so whether you can manage depends on whether you rent or own your home.
Additionally, the required living expenses will vary depending on your health status at that time.
While individual circumstances vary, it is necessary to consider ways to cover living expenses for at least five years—or possibly longer—using retirement benefits, savings, re-employment, or part-time work.
(Reference: How to increase disposable income in the era of inflation)
Of course, it is possible to receive pension benefits early, but in that case, the amount will be reduced, so the need for countermeasures remains the same.
Two Paths to Staying with the Company After Retirement
Since it is more reassuring to have some income during the five years until the pension starts, many people choose to stay and work past the retirement age of 60.
Generally, many companies set retirement at 60 and adopt a system where employees can work until 65 if they wish.
To stay with the company using this continuous employment system, there are two main methods: "Work Extension System" and "Re-employment System."
The key points of each are introduced below.
1. Work Extension System
The key points of the Work Extension System are largely the following three:
• Same working conditions after retirement
• Payment of retirement benefits
• Maintenance of motivation
Under the Work Extension System, you are not formally retired but continue to be employed, so salary and job duties do not change significantly.
Since the pre-retirement working conditions are maintained, it is easier for employees to maintain their motivation.
Unlike the Re-employment System described later, this extends the period of service, so retirement benefits are paid when the extension period ends.
2. Re-employment System
I would also like to introduce three points regarding the Re-employment System:
• New labor contract
• Change in working conditions
• Reduction in salary
In the Re-employment System, an employee officially retires at the retirement age and receives their retirement benefit.
Afterward, they are re-hired under a new labor contract. It is common for working conditions to change to something different from regular employees, often resulting in a salary reduction.
The rate of reduction varies by company, but even if the job description remains the same, wages may decrease by 40% to 50%.
Which Should You Choose: Work Extension or Re-employment?
Regardless of which system you choose, it is necessary to check the details of your workplace's employment rules in advance.
However, as my personal opinion, I believe "Work Extension," where you work under the same conditions after retirement, is actually difficult. From the corporate perspective, the risks they must take are not small.
Therefore, let me list the merits and demerits for the company regarding the Work Extension System in the next section.
Merits and Demerits for Companies in the Work Extension System
Merits
The merits of the Work Extension System for companies can mainly be considered in the following three points:
• Succession of experience and knowledge
• Securing an immediate workforce
• Securing loyalty to the company
Having employees with years of experience and specialized knowledge continue to work is a major merit for companies, as it ensures the smooth guidance of younger staff and the transfer of knowledge.
Extending the service of existing employees allows them to be active as an immediate workforce more effectively than hiring new people, reducing operational interruptions and training costs.
Furthermore, the option to work after retirement can be expected to improve motivation for both the retiree and the younger staff, as well as maintain loyalty to the company.
Demerits
The following two points can be considered as demerits:
• Increase in wage costs
• Stagnation of organizational metabolism
In the case of work extension, wage levels are often maintained at a high level, which may increase the cost burden on the company.
There are also concerns that the promotion of younger employees and the introduction of new ideas may be delayed.
Continuing to employ post-retirement workers can mean that important positions remain occupied, which may lead talented younger employees to consider changing jobs for career advancement.
Am I Necessary to the Company? What the Senior Generation Should Do to Survive
For those who want to stay with the company after retirement, you must first ask yourself: would the company offer a work extension after considering the aforementioned merits and demerits?
Whether using the "Work Extension System" or the "Re-employment System," here are things to consider when designing a life plan to survive as a senior employee while continuing your career.
I believe these can be used not only for staying at your current company but also when changing jobs. In fact, these were skills I needed when I changed jobs after turning 50.
1. Establishing Expertise
In the first place, if you do not have some kind of expertise, a company will likely not retain a senior over 60.
It is necessary to redefine your own role where your experience and knowledge as a senior employee can be utilized.
2. Improving Communication skill
Communication gaps can occur between senior and younger employees. Instead of preaching from a high-handed perspective, it is necessary to develop a personality that makes it easy for the younger generation to seek advice.
3. Skill Upgrading
To be a senior employee who is not left behind by the times, acquire new skills. In particular, if your IT literacy is low, other employees—especially digital-native youth—will spend time taking care of you, making you a burden to the organization.
Summary
I personally did not choose the path of serving a company until retirement. I believe it was a good choice, and I am glad I retired early.
However, since everyone has their own life, it is not a matter of which is the correct answer.
I have summarized the early retirement system in the following article, so please refer to it.
Even if you choose to stay with the company, I believe preparation is necessary before reaching that age, just as it is for the choice to leave.
What is certain is that we have entered an era where it is difficult to design a traditional life plan where one retires at 60 and lives thereafter solely on a pension and savings.
About the Author Kenji Kamioka
CEO, Julius Inc. / FIRE Practitioner
Kenji Kamioka is a former IT executive who spent 30 years in the corporate world, with over 10 years working across Asia. His life changed when he read Rich Dad Poor Dad.
Realizing the trap of the "rat race," he started building assets in real estate and stocks while still working. It took him 10 years, but he successfully achieved Financial Freedom and graduated from the salaryman life.
He established his own asset management company to optimize tax efficiency and now dedicates his time to teaching others how to escape the corporate cage.
His advice is not theoretical but based on the gritty reality of achieving FIRE.Credentials: AFP (Affiliated Financial Planner), Certified Real Estate Transaction Agent.
❶『令和のサラリーマンの為のFIREのススメ』(Amazon電子書籍）
❷『FIRE Recommendation for Office Employee』(Amazon Kindle）
