How to Retire in Japan As A Foreigner: A Comprehensive Guide

So, you want to retire in Japan? Don’t worry, as others have the same thought.

If you have been thinking about retirement, maybe it's time to consider the steps on how to do so.

To help you, we created this comprehensive guide to make it as simple as possible.

Is Japan a good place to retire?

According to TimeOut, Japan is ranked in the top 10 best countries to travel. While it's an amazing place to travel, it offers a different experience when living here, especially for retirement.

So, let’s go over the pros and cons of retirement in Japan to consider.

Why should you retire in Japan? The pros

Japan is one of the most popular vacation destinations. However, living in Japan will not be the same when visiting as a tourist.

So what’s life like in Japan?

a) Excellent life quality

Even though Japan is ranked 14th for overall quality of life worldwide, it is ranked the best asian country for its quality of life, according to US News, making it the best asian country to live in.

Additionally, Japan outranks other countries in safety, environmental quality, and education, making it a good choice if you want to raise a family here.

Furthermore, their healthcare system is a major plus. While free healthcare does exist in other countries, all major Japanese hospitals and clinics accept national health insurance, which covers 70% of the medical cost. Compared to the US healthcare system, Japanese healthcare is more affordable and thorough.

b) Unparalleled safety

While nowhere is 100% safe, Japan has a much lower crime rate and safer living environment compared to the US, which is an attractive feature for any retirees.

It is amazing to walk around the city after 7 pm and feel safe while doing so. However, it’s still recommended to be alert and aware of your surroundings.

You can always feel safe to leave your belongings at busy cafes and restaurants.

Plus, you'll see young children here taking public transportation as it is safe and easy.

While natural disasters exist, such as earthquakes, tsunamis, and volcanic eruptions, you can retire somewhere with low natural disaster occurrences, such as Hokkaido.

c) Remarkable convenience

Japan is known for being convenient, especially in the city.

You will have convenience (konbini) stores that can do anything, on-time public transportation, delicious restaurants nearby, walkable pathways, rentable cars for more rural travel, and rentable bicycles for more short-distance travel.

While impossible to find trash cans at times, you will always have clean and maintained parks in Japan.

Additionally, Japan offers a unique shopping experience with its long shopping street markets (shōtengai) and modern tall shopping malls that offer various restaurants, cafes, shops, and entertainment. And you can find anything at the Japanese dollar stores.

With Japan's location, you can even travel to nearby countries such as South Korea, China, the Philippines, Thailand, and Vietnam.

Why shouldn’t you retire in Japan? The cons

While these cons will vary from person to person, they can still hinder how you live in Japan.

a) Complex Japanese bureaucracy 

Bureaucracy is always a headache, but Japanese bureaucracy takes the cake.

Anyone with a long-term visa understands how particular the Japanese administrative procedures can be, along with needing to register their residency and enroll in healthcare when they arrive.

Things get more complicated and stressful if you are abroad trying to apply for a visa to Japan. 

Being in Japan does help, but Japanese bureaucracy involves specific vocabulary.

b) High cost of living 

While Japan does have a lower cost of living, you compensate for the lack of space in Japan, especially in the city.

With limited space, finding the perfect house in Japan will be expensive. There are other factors to consider, such as if you want to rent or own your property, as houses in Japan lose their value over time.

c) The language barrier

While knowing Japanese is not required to live and work in Japan, it will be helpful for retirement here.

Even though Japanese cities have English translations, knowing conversational Japanese will make life much easier.

How does retirement in Japan work?

An overview of the Japanese pension system

To understand how retirement works in Japan, you’ll need to know how the Japanese pension works.

The Japanese pension system, known as nenkin 年金, provides retirement support managed by the Japanese government, with the retirement age at 65.

It operates similarly to The United States’ social security systems. So you will need to contribute to the Japanese pension system to gain its benefits.

There are two types of pensions in Japan: 

• Employee Pension Insurance (kosei nenkin) for employees.

• National Pension (kokumin nenkin) for self-employed individuals and others not covered by the other.

The amount of pension depends on different factors such as the number of years contributed and the average income during the contribution period.

Additional retirement savings options in Japan

While the state pension rate is manageable, it is best to have additional retirement investment.

While not classified as a traditional pension like the Employee Pension Insurance (kosei nenkin) or National Pension (kokumin nenkin), look into having a NISA, Tsumitate NISA, or iDeCo account.

These additional investing accounts and the traditional pension system offer greater flexibility and control over your retirement planning.

Does Japan offer a retirement visa?

Unfortunately, Japan does not offer a retirement visa. So foreigners need to consider various long-term visas to retire in Japan.

Japan retirement visa options

While retirement visas do not exist, you can visit Japan for 90 days, depending on your citizenship and passport. With this method, foreign retirees will not obtain pension benefits and a foreign residency card and pay in full for health care.

For any longer stay with pension benefits, you will need to apply for a visa.

a) Turn a long-term visa into a permanent residency in Japan.

Most long-term visas, such as work or highly skilled professional visas, have a set amount of years that would need to be renewed each time.

If you stay in Japan long enough, you can apply for a permanent residency visa to live in Japan indefinitely, which allows retirement to be an option.

b) Obtain a spousal visa.

Obtaining a spousal visa is one of the easiest and simplest methods if you are married to a Japanese citizen or a permanent resident of Japan.

Through them, you can get a spousal visa to live and work in Japan, making it possible to have a retired lifestyle in the country.

What are the requirements for retirement in Japan?

No matter which visa you will apply for as a foreigner, you will need to demonstrate:

• Financial independence: you need enough income to support yourself and your dependents while you are in Japan.

• Valid health insurance: if you are coming from abroad.

• No criminal background.

Housing in Japan for retirement

Now that you have your visa all figured out, it’s time to figure out where to live. But before that, let’s discuss the housing situation in Japan.

What is housing in Japan like?

According to data from Numbeo, Japan has lower rent costs at 66.7% than the US. United States.

Owning property in Japan comes at a significantly higher cost compared to the US. Japanese apartments in the city are 106.79% higher than in the US, while 57.87% higher outside the city in Japan than in the US.

Additionally, one noticeable difference between these housing markets is the value of these properties. While US properties will increase in value over time, creating a sense of long-term investment, Japanese properties will depreciate over time. This distinction greatly influences retirement plans and long-term financial planning.

Even so, akiyas or very cheap houses in Japan are a popular option to own and renovate a house to your liking.

Where is the best place to retire in Japan?

It all comes down to personal preference and your lifestyle.

a) The city

While many dream about simple country life, the city offers many opportunities and advantages when retiring.

For one, there are plenty of essential services, such as healthcare facilities for preventive screenings and specialized treatments.

You’ll never get bored in a city with many recreational activities, museums, art galleries, theaters, and entertainment venues. Plus, you will have the opportunity for social connections.

b) The countryside

The countryside, also called inaka, in Japan is a unique experience. For one, you will quickly find becoming friends with your neighbor is second nature, diminishing the sense of worry and struggle.

You will always have the freshest product within your reach, whether homegrown or from the local market.

If you think you will be bored, think again. Japan has many festivals year-round where you will enjoy good food, music, and performances.

Of course, small cities like Fukuoka are the perfect option for something between city and country life.

Finances for retiring in Japan

Your dream to retire to Japan is so close. There are just a few financial things to take care of.

Please consult a tax professional who can provide detailed and tailored advice for your specific citation so that you are complying with all your tax obligations.

​​​​How much money do you need to retire in Japan?

While it’s impossible to equate an exact amount to retirement in Japan, be aware of the cost of living.

You can determine your monthly financial needs by estimating your expected retirement expenses like housing, food, healthcare, transportation, travel, and entertainment.

So, depending on your lifestyle and how much you are willing to spend, Japan’s cost of living may be the same, higher, or lower than your home country.

Tax obligations in Japan during retirement

Without going into too much detail, there are a lot of finances and taxes to consider during retirement in Japan, and that depends on having US-based income, 401K, foreign investments, and others that are subject to taxes.

a) Japan residency status affects your taxes.

Non-permanent residents

All non-permanent residents living in Japan for less than 5 years will pay taxes on their Japanese-sourced income and foreign income brought into Japan.

Additionally, they also pay residency tax every year while living in Japan.

So, retirement in Japan as a non-permanent resident will not be too much of a financial burden.

Permanent residents

Permanent residents retiring in Japan will have more taxation.

They will pay all their taxes on their income in Japan and abroad, which will include pensions, investments, and other forms of income, regardless of where it comes from.

b) Household income will be taxed.

Generally, you will pay income taxes on your pension, global income, and any withdrawals from your tax-deferred investments.

Not only you will have to file your taxes in Japan, you will need to file your US taxes every year if you are a US resident.

While the US and Japan have a tax treaty for individuals to be not double taxed on their tax returns, you need to state any foreign assets and income on your taxes.

c) Inheritance, estate, and gifts will be taxed.

If you retire in Japan, any inheritance, estate, and gift taxes will apply to a person when they receive money or property as an inheritance or gift.

The tax amount will vary depending on the value and the relationship between the giver and recipient.

But generally, the person receiving the inheritance or gift is responsible for paying the tax.

Frequently asked questions

​​Can I retire in Japan as a foreigner?

Yes, foreigners can retire in Japan. While there is no retirement visa for Japan, long-term visas offer a way for expat retirees to stay in the country.

Do retirees pay taxes in Japan?

If you are an American retiree, your American retirement account is taxable. So, you need to report any annual interest, dividends, and gains to the Japanese tax system.

American expatriates have Foreign Tax Credits (FTCs), which provide a tax credit or deduction to reduce the tax burden during retirement abroad.

How does retirement work in Japan?

Retirement in Japan includes pensions, investments, and savings for any retiree lifestyle. The government provides a pension, which operates similarly to the US Social Security.

In closing

Retiring in Japan as a foreigner offers a unique living style. With careful planning and financial preparations, expatriates will have a fulfilling retirement in Japan.