In this issue’s Teaching Assistance column, a former professor and language program coordinator offers valuable advice to beginning teachers in Japan. He suggests that it is not too early for even graduate students with part-time jobs or Teaching Assistants to build their pensions and invest their salaries wisely. Following his retirement from the English Department at Aoyama Gakuin University in Tokyo, Gregory Strong (Figure 1) returned home to Vancouver, Canada, to become a freelance writer and educational consultant.
Teaching in Japan may be the start of your career or your re-entry into the field of education with a graduate degree. It may represent your first well-paying job or a new role as a Teaching Assistant (TA) or Japan Exchange and Teaching Program participant (JET) and a chance to explore a wonderful profession. You may find yourself as I did many years ago with one burning question: What do you do with your money?
Your first possible consideration, paying for a pension, is not optional. All residents of Japan between 20 and 59 are required to pay into the kokumin nenkin (the national pension plan). Full-timers have the monthly 16,610-yen premium deducted from their salaries, but you may be working part-time for several different employers. To comply with the law and to become eligible for disability insurance, as well as a future pension, you need to register at a Japan Pension Office. After that, you can pay your premiums at a bank, a post office, or even a convenience store (Blincowe, 2018). Why pay if no one has noticed? For one thing, it is an enforced savings plan for money that you might otherwise spend. Blincowe elucidated that you can get it all back as a lump sum payment if you leave Japan within three years. If you stay in Japan for ten years, you are eligible for a small lifetime pension, 195,225 yen per year which can be collected overseas. Of course, you can receive more if you contribute to the system for 25 years (457,839 yen per year), or if you delayed receiving your pension until you become 65 or even 70. The best things about this pension are that it is for a lifetime and you do not have to manage it.
If you are serious about providing yourself with retirement funds, there are two other financial instruments: the Nippon Individual Savings Account (NISA), and the iDeCo (All About Japan, 2019). The NISA is a government plan to encourage short-term retirement savings. It can be opened at a bank, and you can contribute a maximum of 1.2 million yen to it each year for five years for a maximum investment of 8 million yen. There is also the Tsumitate NISA, or ordinary NISA, a long-term plan to which you contribute over a 20-year period for a maximum investment of 22 million yen after 40 years. If you plan to stay in Japan until age 60, then you should choose the Kojingatakakuteikyoshutsunenkin iDeCo account (National Pension Fund Association, 2021). You can set up the account at a bank where you can keep it in cash, invest in Japanese mutual funds, or buy insurance. The amounts you can contribute monthly depend on whether you are working full-time and can expect pension contributions from your employer, working part-time at different places, or running your own business. You can invest pre-tax income until age 60 and cash out tax-free (to a maximum of 22 million yen after 40 years) when you retire. No other country allows you to save taxes both when you contribute and when you withdraw your savings.
Your second choice is to put your money into your career. Many professors I know in Japan started as Assistant Language Teachers (ALTs), liked the experience, and decided to make a career in teaching. They upgraded their qualifications by enrolling in graduate degree programs. They kept their jobs and studied part-time at local institutions such as Temple University Japan, which has more than 1,800 successful graduates from its M.A. program since 1982 (Temple University of Japan, 2021) or via distance courses through Macquarie University, Australia, one of many universities offering graduate degrees in TESOL. Investing in your career today means a future payoff in increased opportunities, higher pay, and potentially more rewarding work.
Your third choice is to invest your money. Hallam (2017) described how he became a millionaire on a modest teacher’s salary while still in his 30s. He made the case for investing in exchange traded funds (ETFs) by using discount online brokerages. Each ETF is a broad basket of stocks that track the major stock markets in places like New York or Tokyo, have low management fees, outperform mutual funds over time, and do not require picking winning stocks. Of the many ETFs, some specialize in stocks in companies in the tech sector, consumer staples, or large companies. In his later writing, he dismisses “get rich quick schemes” like Bitcoin and Game Stock, which have had many more losers than winners among their investors. In Hallam’s (2020) best-known argument for investing, he asked his readers whether they would be richer today if in 1801 they had invested one dollar in gold or one dollar in U.S. stocks. In 2020, the gold would only be worth 101 dollars, yet the stock market investment would be 28.42 million dollars. His point was that gold possesses an irrational, romantic hold on our imaginations over investing early, consistently, and conservatively in the stock market.
Another excellent investment resource is the YouTube channel, Our Rich Journey, by Amon and Christina Browning (2019), an American couple who amassed more than two million dollars in nine years and retired to Portugal in their 40s. They are part of a lifestyle movement called Financial Independence, Retire Early (FIRE), which relies on saving as much of your income as possible, investing it, and then retiring early. Their numerous YouTube postings describe their various suggestions, such as getting renters (i.e., roommates) to help pay off the mortgage, running an Airbnb, creating side businesses using Amazon, and investing in the stock market.
At present, there are a wide array of easily accessible resources to help you decide what to do with your money. It is easy to use them to learn about pensions. Now is the optimal time to upgrade your educational qualifications or to learn about investing for your future. No matter how much businesses, institutions, or even governments promise to look after you, there is one thing I have learned over a long teaching career: As far as finances go, no one will care as much about your money as you because you live with the consequences.
References
All About Japan. (2019, April 17). All about investing for retirement in Japan. https://allabout-japan.com/en/article/8137/
Blincowe, A. (2018, August 24). Understanding the Japanese pension system part 2/3: What will I pay? Gaijin pot. https://blog.gaijinpot.com/understanding-the-japanese-pension-system-par...
Hallam, A. (2017). Millionaire teacher: The nine rules of wealth you should have learned in school (2nd ed.). John Wiley & Sons.
Hallam, A. (2020, August 21). Gold’s romantic delusion. Assetbuilder. https://assetbuilder.com/knowledge-center/articles/golds-romantic-delusion
National Pension Fund Association. (2017). What is iDeco? iDeco koushiki saito [iDeco public website]. https://www.ideco-koushiki.jp/english/
Our Rich Journey. (2019, August 8). How we retired at 39. [Video]. YouTube. https://www.youtube.com/watch?v=KR_eIoIo2vU
Temple University. (2021). Master’s programs - program features. Temple University Japan Campus. https://www.tuj.ac.jp/tesol/about/masters/index.html