Here’s a fairly common retirement strategy: The kids are gone and have families of their own, so the house you bought so long ago and which is likely paid for by now becomes too big, so you sell it and use the money to buy a condo somewhere in or near an urban center where public transportation and retail resources are easy to access. However, a recent feature in the weekly magazine Shukan Gendai warned people who are thinking of doing this to think twice. It may not be as easy as you think, and, in fact, it could end up being a disaster.
The number of people in Japan over the age of 65 recently exceeded 35 million, an expanding demographic that has become a target for real estate agents who are selling used or new condos, which tend to retain their value more readily than single-family homes. As it stands, many of these new retirees probably live in single-family homes in the suburbs of large cities to which the heads-of-household used to commute. These houses are likely two stories, a structural feature that becomes more of an inconvenience the older you get, and they are also probably far from public transportation hubs, meaning the people who live in them require a car to get around. Realtors use such reasonings to convince people to sell their homes and buy condos, and it makes sense, but not as much sense as it used to. First of all, there are just too many single family houses on the market and not enough people who want to buy them, and that disadvantageous ratio will only get worse as the population greys further.
Gendai also brings up the magic amount of ¥20 million, which is what a retired couple should have in savings to supplement their pensions. Actually, ¥20 million is probably not enough unless the couple is able to invest in some kind of financial instrument that can guarantee a small income, but most people still have their savings in time deposits, which generate almost no income, so the thinking here is that the couple lives off their pensions and doesn’t touch their savings since they may need it for emergencies. It’s a precarious way to live.
Gendai is actually quite generous by suggesting that a couple can probably sell their house for, again, ¥20 million (likely they paid twice that much for it, not counting the interest on their mortgage), and then they can use that money either to buy a small condo or rent one. But as Gendai points out, even if you found a condo you liked for ¥10 million (very difficult if you want to live in Tokyo, though it’s possible on the periphery), you’d still have to pay monthly management and repair fees, which could quickly use up all the money from the sale of your house. If you decide to rent, how much do you think you can afford? If you’re buying should you take out another loan? What about caregiving costs in the future? All these items must be discussed, and the best thing would be to hire a financial planner who can look at your situation and make some kind of guess as to what the couple can afford and for how long.
But the financial planner that Gendai talked to, speaking generally, seems to think that most retired people should just stay put, and not just for financial reasons. Though your old house may be too big and need some renovation, moving out at an advanced age can be traumatic. You would be leaving behind a community that you know, and which knows you, for an environment that is not familiar. A real estate consultant tells the magazine much the same thing. He only recommends the sell-and-buy scenario to people who have saved a lot of money and who are financially very well off. (The article does mention old age communities and nursing homes, but rightfully implies that only the very well-off can afford them in Japan. They don’t mention public care facilities at all, which are beyond the pale since they tend to be for the bedridden.) There are too many things that can go wrong if your plans are based on a limited fixed income. He’s seen older people of limited means settle on a rundown condo and become frantic trying to make it livable. Many elderly people end up living in older condo complexes with lots of vacant units, which can be a dangerous situation.
Dangerous in what way? Again, it has to do with community. Based on our own experience, community solidarity is more pronounced in neighborhoods where people feel they have a long-term stake in the matter. Condo complexes, even those where the residents are all owners of their units, are more likely to lack this kind of solidarity, despite the existence of homeowners’ associations. And, obviously, the more vacant units in a building, the fewer people to bond with, so as a retired couple or individual gets older, they become more isolated. Gendai reports that every year some 30,000 people die alone in their homes—a situation called kodokushi—and many aren’t found for days or even months. A notary public interviewed by the magazine says the major reason why this kodokushi problem is increasing is not just due to the greater number of old people, but rather because these people are no longer connected to their communities. A scholar says that without close relationships with neighbors, elderly residents of condos are much more likely to become hermits. If a health emergency happens, no one knows.
A related article that appeared in the Feb. 7 Asahi Shimbun reports that 71 percent of the kodokushi cases in Osaka Prefecture last year were people over 65, and police say that in 382 cases the bodies were not discovered for at least a month. The number that weren’t discovered for more than 2 days was 2,996. The article goes on to say that there is still no legal definition for kodokushi and that the central government does not keep nationwide data on the phenomenon—the 30,000 figure seems to be an extrapolation rather than the result of surveys. Local governments tend to have their own definitions, or no defintions at all. Osaka simply says that 12,309 people died in the prefecture last year “not in hospitals from natural causes” and not due to suicide or any discernible criminal activity. In addition, three times more men die alone and undiscovered than women who do. And 2.4 percent remain unidentified in the long run. The Nissei Research Center found that Tokyo, of course, has the highest number of kodokushi cases followed by Osaka, and that within Tokyo lower income wards produce higher numbers of kodokushi than higher income wards. This is one of the primary reasons why landlords don’t want to rent to elderly people, so the fact is even for those who insist on selling their homes and moving to the city to live out their twilight years, unless you’ve got the cash for a condo, you may not be able to find a place that will have you.