What is the 30 million yen problem in retirement? Explanation for beginners about how much money you need for retirement due to rising prices

[Summary]

The ``retirement 30 million yen problem'' refers to the original ``retirement 20 million yen problem,'' which has come to be talked about as an even bigger deficit due to rising prices and longer lifespans.

However, this is also an area where it is easy to misunderstand.

This does not mean that everyone has to come up with 30 million yen.

To be exact, some people may have a shortage of 30 million yen in their retirement funds, depending on their pension amount, living expenses, housing costs, length of work, and medical and nursing care expenses.

The 20 million yen retirement problem, which became a hot topic in 2019, started with a model case in which a monthly shortfall of about 50,000 yen for 30 years would amount to about 20 million yen. When inflation, longevity, rental costs, and individual differences in pension amounts are added to this, the shortfall can increase to nearly 30 million yen instead of 20 million yen.

The important thing is not to be swayed by the number 30 million yen. Figure out your monthly shortfall and calculate how many years' worth of funds you need.

What is the 30 million yen problem in retirement?

The 30 million yen retirement problem is not the name of a public system.

Based on the issue of 20 million yen for retirement, which became a hot topic in 2019, it is a popular saying that ``20 million yen may not be enough for some people,'' considering rising prices and longer lifespans.

Regarding the original 20 million yen retirement problem, the following model cases were mainly discussed.

• Husband over 65 years old
• Wife over 60 years old
• elderly couple unemployed household
• Assuming retirement period to be around 30 years
• Expenses are more than monthly income

If the monthly deficit of approximately 55,000 yen continues for 30 years, it will become approximately 19.8 million yen.

55,000 yen
×
12 months
×
30 years
=
19.8 million yen

This number became popular as the ``retirement 20 million yen problem.''

Why was it said to be 30 million yen?

The biggest thing is that living expenses are becoming more and more variable.

Even if you use the household budget model as of 2019, if prices rise, the necessary living expenses will increase. Food, electricity, gas, medical expenses, nursing care-related expenses, home repair expenses. There are many items that are surprisingly difficult to cut down on when it comes to spending in retirement.

For example, suppose a household that was living on 300,000 yen a month now needs 350,000 yen a month to maintain the same standard of living. If your pension income doesn't increase much, the monthly shortfall will continue to grow.

Shortfall: 50,000 yen → 18 million yen in 30 years
Shortfall: 80,000 yen → 28.8 million yen in 30 years
Shortfall: 100,000 yen → 36 million yen in 30 years

When you look at it this way, the figure of 30 million yen suddenly doesn't seem like an exaggeration. If the monthly shortfall of around 80,000 yen continues for a long time, it will reach a fairly similar level.

Longevity increases the required period

Another is longevity.

30 years from age 65 to 95. If you are between 65 and 100 years old, it is 35 years.

Even if the monthly shortfall remains the same, the required funds will increase over time.

If you look at this table, you can see that your retirement funds will vary considerably depending on how old you plan to live.

Living a long life isn't a bad thing. However, asset planning can also be a risk. This is the so-called longevity risk.

Do we really need 30 million yen?

The amount needed varies considerably from person to person.

Households who own their home and have finished their mortgage can significantly reduce housing costs. Households with employee pensions, corporate pensions, and retirement allowances are also likely to have smaller shortfalls.

On the other hand, people who continue to incur rental costs, people who rely on the national pension, and people who have only been enrolled in the employee pension for a short period of time are likely to have a large shortfall.

In other words, the problem of 30 million yen in retirement is

30 million yen is not the correct answer for everyone, and some households end up with a shortfall of 30 million yen.

That's a close understanding.

The scary thing about rising prices is that it makes it difficult to lower living standards

The most troublesome thing about inflation is that it causes your expenses to gradually increase.

When you are young, there is room to make adjustments to your income, such as increasing your working hours, changing jobs, or taking on a side job. In old age, there is less room for this.

Furthermore, many expenses are difficult to cut in retirement.

• food expenses
• Utility expenses
• medical expenses
• Nursing care costs
• Housing costs
• Communication expenses
• Transportation expenses

You can adjust it for traveling or hobbies. However, medical, housing, and utility costs cannot be reduced to zero.

Therefore, when it comes to retirement funds, you need to think about not just how much you can save, but also how you can withstand inflation.

realistic way of thinking

These days, rather than thinking about whether you want 20 million yen or 30 million yen for retirement, it is more realistic to consider a combination of the following items.

Retirement funds are not determined by a single number. It looks at pensions, retirement allowances, savings, investments, housing, and work styles.

Calculate roughly how much you need

Rather than a difficult simulation, the following formula is sufficient.

monthly living expenses
-
Monthly income such as pension
=
Monthly shortfall

Monthly shortfall
×
12 months
×
years of retirement
=
Required withdrawal amount

For example, consider:

If you do this calculation, it will be easier to see whether you are worth 20 million yen, 30 million yen, or need less.

How to prepare 30 million yen

Just looking at the figure of 30 million yen, it seems heavy. However, you don't need to make the entire amount at once when you retire.

There are multiple ways to prepare.

• Secure life defense funds with deposits
• Make long-term, accumulated, and diversified investments with NISA
• Use iDeCo or corporate DC
• Allocate a portion of your retirement allowance to living expenses in retirement
• Reduce your mortgage before retirement
• Work within reason even after the age of 65

Investing is not a panacea. There is also loss of principal. However, when it comes to preparing for inflation, there are concerns about relying too heavily on savings.

It's easier to think about separating your retirement funds into the part you want to protect through savings and the part you want to grow through long-term investments.

Illustration: The 30 million yen problem is determined by "shortage amount x period"

Summary

The problem of 30 million yen in retirement is an expansion of the 20 million yen problem in retirement due to inflation and longer lifespans.

However, 30 million yen is not the same amount required for everyone.

If you are short of 30,000 yen every month, it will cost you 10.8 million yen in 30 years. If you are short 80,000 yen every month, you will end up with 28.8 million yen in 30 years. If you are short by 100,000 yen every month, you will end up with 36 million yen in 30 years.

In other words, what you should look at is not whether you have 20 million yen or 30 million yen, but your monthly shortfall.

First, check the estimated pension amount on Nenkin Net. Next, estimate your living expenses in retirement. Think about how to make up the difference with savings, retirement allowance, NISA, iDeCo, and working period.

Calculate your own household budget without being influenced by numbers. That is the most realistic way to approach the problem of 30 million yen in retirement.

Source/reference materials

• Financial Services Agency, Regarding the publication of the Financial Services Council “Market Working Group” report
• Financial Services Agency, Financial Services Council Market Working Group Report “Asset Creation and Management in an Aging Society”
• Japan Pension Service, Estimated pension amount using “Nenkin Net”
• Related article: What is the 20 million yen problem in retirement? Is it really necessary for everyone? Explanation for beginners
• Confirmation date: 2026-05-30