◆ What should I do to raise funds for retirement?
The name is “Money Plan Clinic”, which answers the problems of households that you have received. This time, a self-employed housewife in her thirties who is worried about retirement funds. Mr. Yasuhiko Fukano, a financial planner, will give you advice.
Female / Self-employed / Freelance / 38 years old
Aichi / Owned house / condominium
◇ Family structure
Husband (company employee / 39 years old), child (kindergarten / 6 years old)
◇ Consultation content
I’m worried about my retirement funds. My husband is a company employee, but since both husband and wife are members of the national pension and national health insurance, the amount of pension received is small. I’m not sure if I’ll get a retirement allowance, and if so, it’s probably insignificant.
I have a freelance job, but my income is volatile and I can afford to lose my income at any time. Assuming that my eldest son’s college expenses will be covered by his current savings, I would like to continue to steadily raise funds for retirement.
My husband also has a National Pension Fund, but I haven’t, and I’m considering an additional pension and a defined contribution pension. In the case of defined contribution pension plans, I have no operational knowledge and I am afraid of the risk of loss of principal, so I cannot take steps.
I used to refinance my mortgage, but recently interest rates have fallen, so I’m wondering whether to refinance within the same bank or switch to fluctuations. I would appreciate it if you could teach me. Thank you very much.
◇ Household income and expenditure data
Owl’s household income and expenditure data is as shown in the chart.
◇ Supplementary household income and expenditure data
(1) Breakdown of insurance
・ Medical insurance (whole life insurance, hospitalization 5000 yen, outpatient special contract, comprehensive advanced medical special contract) = insurance premium 2500 yen
・ Term insurance (10-year insurance period, death protection 20 million yen) = insurance premium 2800 yen
・ Medical insurance (whole life insurance, hospitalization 5000 yen, outpatient special contract, comprehensive advanced medical special contract) = insurance premium 2400 yen
・ Term insurance (10 years insurance period, death protection 10 million yen) = insurance premium 1000 yen
・ Medical insurance (up to 18 years old, with personal liability insurance) = premium 1170 yen
・ Student insurance (maturity fee 3 million yen) = monthly insurance premium 12,500 yen
(2) About mortgage (after refinancing)
Borrowing amount / 16.5 million yen, Borrowing year / 2015
Borrowing period / 25 years, fixed 20 years, interest rate 1.60%
(3) How to use the bonus
Property tax / 120,000 yen, car maintenance fee / 100,000 yen, compensation for deficit months, ceremonial occasion expenses, etc. The rest is savings.
(4) Child’s course
Public up to high school, university hopes to go to school at home, with a maximum of private science. If the university is far away, I would like to support as much as possible, such as sending money to live alone.
◇ Three advices from FP Yasuhiko Fukano
Advice 1: Tax saving benefits are effective from “now”
Tip 2: DC isn’t just about risky products
Advice 3: Utilize available systems
◆ Advice 1: Tax-saving benefits are effective from “now”
Regarding retirement funds, the priority is to fund your child’s education, so let’s start with that.
Currently, the savings are 13 million yen. Since the maturity fee for student insurance is 3 million yen, the total is 16 million yen. On the other hand, the average university cost for four years in private university science is about 5.2 million yen. The average monthly remittance cost is 80,000 to 90,000 yen, so it is 4 million yen in 4 years. Even if we do not consider future savings, we will have nearly half of the remaining 7 million yen.
It is undecided whether or not the remittance cost will be incurred, but for the time being, it is better to secure the cost including the cost without touching it, and if it does not occur, use it for retirement funds.
By the way, I am worried about retirement funds, but since my husband is already a member of the National Pension Fund, in terms of the pension system, I have secured the “second floor” part, which is an additional amount of payment, for the time being. I will.
Defined contribution pension (DC) can be used on the “3rd floor” for the purpose of further addition.
In addition, from 2018, a funded type has been added to NISA (Nippon Individual Savings Account). The maximum annual investment amount is 400,000 yen, but the tax exemption period is 20 years, which is four times the conventional amount, so it is an option to prepare retirement funds by investing in stocks.
Regarding his wife, “Owl-san,” he said he was suffering from joining a DC or an additional pension. It doesn’t matter which one you use, or you can use it together (the National Pension Fund and the supplementary pension cannot be used together).
Also, if you are a self-employed person, you can use small business mutual aid. There are also merits such as the full amount of the stake (upper limit of stake / 70,000 yen per month) and income deduction, so the second floor will be secured.
When using DC, it is an individual type (in the case of a self-employed person, the upper limit is 68,000 yen per month including the National Pension Fund), but this also has the same tax-saving merit as small business mutual aid.
The purpose is to raise funds for old age, but as long as you have income, you can definitely get an effect from the year you start, which is also a big advantage.
◆ Advice 2: DC is not just a risky product
However, there is a statement about DC that “operational risk is scary.” However, not all investment products under the DC system are risky.
Each financial institution has more than 20 products for DC, among which are fixed-term deposit type products with principal guarantee (1 year fixed term, 3 year fixed term, etc.) and interest rate guaranteed insurance products (individual annuity). Some financial institutions have a type similar to insurance).
If you are really worried about operational risk, you should choose these products. Also, for example, half may be an investment trust and half may be a fixed deposit type, and the allocation can be changed on the way.
One thing to keep in mind when using DC is that even if the product is a principal-guaranteed product, costs (a management fee of several hundred yen per month) will be incurred. The amount varies depending on the financial institution, so it is important to carefully compare and consider the selection of the financial institution along with the lineup of investment products that we handle.
Another thing is, don’t overdo it just because it has tax benefits. As a general rule, DC withdrawals are after the age of 60. If you shift your money too much, you will lose your liquid money on hand.
You can change the stake, so be sure to make a contribution by constantly comparing it with your household situation and future life plan.
◆ Advice 3: Utilize available systems
Finally, refinancing mortgages, certainly, interest rates are now even lower than they were before. It would make sense to refinance again if you get estimates from multiple financial institutions and if you get a total of more than you are now even if you incur various refinancing costs.
However, fluctuations are not recommended even at low interest rates. Considering that Owl is self-employed, I would like to avoid the risk of rising interest rates. Think of it as fixed because of the ultra-low interest rates.
There are many uncertainties in the future as to how much retirement funds should be safe, so we cannot say for sure at this stage. Therefore, rather than worrying more than necessary, it should be considered sufficient now to make good use of public systems and tax-saving means such as DC and the National Pension Fund.
After that, both husband and wife should be healthy and work as long as possible. At least up to 65 years old. More if possible. This is also the most effective measure for old age.
Anyway, it’s great to have a mortgage and save this much. There is no waste in insurance products, and household management is well managed. The best policy at the moment is to steadily save as it is.
◆ Impressions from the counselor “Owl”
I was vaguely asked for various anxieties, but thanks to Professor Fukano for carefully clearing the options one by one, I think I could see the light in future measures for old age.
Especially for DC, I feel that the idea that half of the funds are investment trusts and half are fixed deposit types suits me. From now on, I would like to continue to live in good health and steadily by making good use of the public system without worrying more than necessary. Thank you very much for your advice!
The one who taught me … Mr. Yasuhiko Fukano
One of the veteran FPs familiar at the Money Plan Clinic. Through various media, we provide information on general money-related matters such as household management methods and investment enlightenment. All About Also active as a savings and investment trust guide.
Interview / text: Kyotake Shimizu
Sentence = Arujan Editorial Department