Japan faces financial literacy challenges in retirement

The Society of Actuaries (SOA) Research Institute released a new report titled “Retirement Readiness in Japan: Financial Security and Risk Perceptions.” The report is based on a survey of 750 Japanese respondents conducted in November 2024. It highlights the challenges faced by Japan’s rapidly aging society, where about 29% of the population is 65 or older. The report reveals a significant lack of financial literacy among the respondents. 17% reported having no knowledge of investment products, while 42% said they have limited knowledge. There is also a gap in retirement planning, with 37% of Prime Age Workers and 45% of Pre-Retirees not having engaged in any form of retirement planning. 90% of respondents are worried about external factors such as tax increases and the impact of an aging society.

Japan’s financial literacy gap

Many individuals expect to rely on full- or part-time work for retirement income and lack confidence in their savings. However, there is growing interest in guaranteed or fixed-income products and annuities. Engagement in retirement planning has improved since 2018. The willingness to buy lifetime income products increased from 22% to 35% by 2024, and active management of savings rose from 21% to 50%. The findings stress the need for better financial literacy programs and stronger retirement planning initiatives to prepare Japan’s aging population for the future. The report suggests that proactive measures could improve financial security for retirees as Japan navigates these demographic changes.