Japan Studies

Back to Contents of Issue: April 2001


More Gray Hairs Ahead?

by William Hall

JAPAN FACES A MYRIAD of issues associated with a rapidly aging society. To name but a few: increased healthcare costs, concerns about adequacy of the pension system, development of a home-care helper system, infrastructure construction to provide access suitable for the aged, extension of the age of retirement, and maintaining a healthy and active lifestyle. Further, with the decline in the number of extended families living together, an increasing proportion of households are now comprised by an aged person living alone or a married couple living together with no children.

In September 2000, the General Affairs Agency released the results of a study (Study of Perceptions of Aged Persons Living Alone/As Aged Couples) designed to assist government policymaking on many of the issues outlined above. Eligible respondents for the study were males and females aged 60 and above living alone and married couples aged 60 and above living as a couple with no children (see footnote for details of survey sample population).

THE SURVEY OF AGED PERSONS

As well as attitudinal data, the study also provided some interesting basic demographic information.

  • Among all respondents:
    80% living alone were women
    50% reported being in good health
    25% reported being in average health
    25% reported being in poor health
    27% were working (17% self-employed, remainder as employees) 85% owned their own dwelling
  • Among those living alone:
    20% living alone started to do so after age 70
    39% started in their 60s
    22% started in their 50s
  • Among couples:
    43% became empty nesters in their 50s
    29% became empty nesters in their 60s

In 1994, a similar study had been conducted, but with slightly different age characteristics. In that study, respondents living alone were aged 65 and above (compared to 60 in the current study), and for married couples, the husband was 65 or older and the wife 60 or older (compared to both being 60 or above in the 2000 study). To facilitate trend comparison, when comparative data for the years 2000 and 1994 are shown in this article, the 2000 data have been adjusted to cover only those persons aged 65 years and above.

SATISFACTION WITH DAILY LIFE
Respondents were asked to rate their level of satisfaction with their current daily life on a four-point scale (Satisfied, Somewhat Satisfied, Somewhat Dissatisfied, Dissatisfied). The overall level of satisfaction (Satisfied plus Somewhat Satisfied combined) remains high (82%), although there has been a 10% drop since the 1994 survey (see Table 1). Note that if we focus only on the Satisfied score within the overall satisfaction score, there has been a decrease of some 20%, quite a significant drop in just six years. The major reasons for dissatisfaction were Health of Self/Spouse Is Not Good (58%) and Insufficient Income to Meet Daily Living Expenses (22%). Overall, satisfaction levels are higher for couples than for those living alone.

TABLE 1: SATISFACTION WITH DAILY LIFE
People Over 65 Aged & Living Alone Aged Couples
1994 2000 1994 2000 1994 2000
% % % % % %
Satisfied/Somewhat Satisfied 92 82 89 77 93 85
Satisfied 44 23 40 20 45 26

FACTORS CONSIDERED IMPORTANT IN ONE'S OLD AGE
Respondents were shown a list containing six items and were asked to choose those they considered to be the most important to them in their old age. As can be seen in Table 2, almost all respondents chose Health as the most important element, followed by Family, with scores for both items being similar to those in the 1994 study (see Table 2). Note, however, that the importance of Income/Assets increased by 8% over the last study, as did Hobbies/Interests.

TABLE 2: FACTORS CONSIDERED IMPORTANT IN ONE'S OLD AGE
1994 2000
% %
Health 95 93
Family 58 57
Income/Assets 28 35
Hobbies/Interests 25 33
Friends 29 26
Work 15 12


Respondents were asked what policies they thought the government should emphasize to help cope with the advent of a fully-fledged aging society. They were shown a card listing 12 choices, from which they were asked to choose up to three. Public Pensions (54%), Medical Care for the Aged (53%), and Full Establishment of Homecare Helper (Kaigo) System (48%) topped the list. Given the concerns for health mentioned earlier and the fact that pensions are the main source of income (see below), the top three choices are not surprising.

TABLE 3: DESIRED EMPHASIS FOR GOVERNMENT POLICY
ITEM %
Public Pensions 54
Medical Care for the Aged 53
Improvement of the Homecare Helper (Kaigo) Service 48
Lifelong Health Maintenance 23
Designing Infrastructure With the Aged in Mind 17
Employment for the Aged 16
Creating a Healthy Environment for Raising Children 12
Lifelong Learning 6
Encouragement of Participation in Social Activities 6
Housing 5
Traffic Safety 4
Disaster Countermeasures 3

LIVING EXPENSES/SOURCES OF INCOME
In terms of monthly living expenses, over 70% of those living alone have monthly expenditures of less than 150,000, with 43% spending less than 100,000. Almost 60% of couples live on less than 200,000 per month. Only 14% of respondents spend 250,000 or more on living expenses per month. Given the high cost of living in Japan, the great majority of the aged population can be considered to be living economically and, in some cases, quite frugally.

TABLE 4: MONTHLY LIVING EXPENSES
Overall Alone Couple
% % %
Under 100,000 22 43 10
100,000-149,999 24 30 20
150,000-199,999 24 15 29
200,000-249,999 14 7 18
250,000 or more 14 3 21

For 90% of respondents, the main source of income is a public pension. This is supplemented by employment income (mainly self-employed) for about one-third of the sample, but the percentage of those receiving employment income drops rapidly after age 70.

Note the very low level (3%) of income from interest or dividends, reflecting near zero interest rates and low participation by individuals in the stock market. The level of savings withdrawal (15%) also appears low. The aged are keeping a tight lid on savings withdrawals (15%) compared to what one might anticipate from traditional economic theory.

TABLE 5: SOURCES OF INCOME
Overall Alone Couple
% % %
Public Pension 89 88 90
Employment Income 30 19 37
Withdrawal of Savings 15 15 15
Private Pension 5 3 7
Income From Rent or Land 5 4 6
Support From Children 4 6 3
Income From Interest or Dividends 3 2 4

When asked what was the desirable age up to which one should work, only 8 percent gave 60 years, which is the current upper limit for retirement at most companies. Thirty percent gave 65 years, a further 25 percent gave 70 years, while 28 percent stated that it is better to work for as long as one is healthy, without consideration of age. Thus, there is a significant difference between current reality in the marketplace -- the desire to reduce overhead by slimming down the ranks of older workers (who are more highly paid) -- and the desire of these older workers to continue working. This is an issue that is likely to become increasingly contentious in coming years and therefore bears watching.

A BRIGHT OR GLOOMY SOCIETY?
Finally, respondents were asked what sort of society they thought Japan would be as the aged proportion of its society expands. Respondents were asked to select one response from among five choices on a card: Bright (Akarui) Society, Probably on the Bright Side, Gloomy (Kurai) Society, Probably on the Gloomy Side, and Can't Say Either Way.

Overall, a total of 47 percent of respondents chose Bright or Probably Bright, compared to a total of 34 percent who chose Gloomy or Probably Gloomy. Thirteen percent selected Can't Say Either Way.

Respondents in rural villages had a brighter perception of the future than did dwellers in large cities. Also, respondents in good health had a brighter perspective than did those in poor health. Note also that the percentage of those with a gloomy perspective in 2000 (33%) had risen significantly from 1994 (21%).

TABLE 6: WHAT WILL JAPAN'S AGING SOCIETY BE LIKE IN THE FUTURE?
Bright/Probably Bright Gloomy/Probably Gloomy Can't Say Either Way
% % %
Overall 47 34 13
By City Size
Large Cities 41 37 15
Rural Cities 48 31 14
By Health
In Good Health 50 33 12
In Poor Health 28 39 18
In Comparison with Earlier Study*
1994 50 21 23
2000 47 33 13

NOT A PRETTY PICTURE
What conclusions can be drawn from the data? First, while the overall level of satisfaction with daily life remains high, there has been a significant drop in satisfaction levels in the period between the two studies. Perceptions of the future of Japanese society have also taken a turn for the worse.

As might be expected with a respondent group of aged persons, the major concerns dealt with health -- medical care, home-care helper support services, health maintenance, and so on. The second major category of concerns was related to finances -- income, living expenses, pensions, and the increased cost of health care.

It is not surprising that the aged are worried about finances -- the current and forecast environment is not a pretty picture. Minimal interest income from their savings, a stock market at one-third of its former value, a national debt at 130 percent of GDP, under-funded pension schemes, a declining number of workers to contribute to the pension system, increased costs of health care for the elderly, the need for sufficient funds for an average 20 to 25 years of post-retirement life expectancy, and, to top it all off, politicians at the national helm with little or no credibility.

People over 60 years of age control a very large proportion of Japan's total individual savings and make up an increasingly larger share of the overall population. With over 60 percent of GDP coming from consumer demand, unless the older group's perceptions about the future improve, they may act as a major brake on Japan's ability to recover from its extended recession.

*65 years and over

Source: General Affairs Agency [Koreisha Hitori Kurashi-Fufu Setai Ni Kansuru Ishiki Chosa], Sep. 2000. Attack sample of 3,000 randomly selected Japanese nationals at least 60 years old and living in a household alone or married with no children at home was used. Personal interviews were completed with 2,203 individuals (878 males and 1,325 females), a 73 percent completion rate. Aged persons living alone provided 812 completed interviews, and one member of an aged couple provided a further 1,391. Fieldwork for the study was completed in November 1999.

William Hall (williamh@isisresearch.com) is president of the ISIS/RBC/CORAL Group, which provides market research and consulting services in Tokyo.

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