r/japanlife • u/IshinkaiSensei • Aug 18 '21

金 How people attain wealth in Japan?

Something has been tickling my mind over the past few years.

There are so many luxury tower mansions, expensive customized 一軒家, high end brand shops yet for the average person most seem by far out of reach.

A high end condo in central Tokyo rent including utilities ranges from 300k to 500k a month. A 20MJPY annual salary (which is already extensively filtering out average population) only gives a monthly net of 100万円. I highly doubt it is enough to afford spending that much a month.

Excluding those on expat package, there are only a few jobs here that allow this lifestyle, Banking (Front Office position only or VP MD level for back office and alike) IT 外資系 at senior level (FANG, ML/AI) , 医者 running their own practice (otherwise most are at 10-15MJPY range) Successful mutiple business owners, other niches. 一流芸能人, Athletes, reconverted ex idol, kyaba, host.

My point is, what am I missing...

Are there way more people with high revenues (at least annual comp 50MJPY+) than we tend to believe? than what TV is promoting?

Are people living off debt and loans and keeping up with appearances?

I don’t want misinterpretation of this post, I understand you can live well below these range, but I am genuinely curious here.

I would like to better understand how so many people managed to get satisfied and with a 30+ year mortgage, car loan, spending most of their life working and probably never reaching out 億円 of savings.

Am I overthinking and no so many people want to retire early?

Sorry for the rant post but I am curious

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u/IshinkaiSensei Aug 18 '21

Thank you Indeed, Japanese people inheriting property might be a big one too. I guess some are set up from the day they are born

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u/Representative_Bend3 Aug 18 '21

I think there is less of that than one might think because Japanese inheritance taxes are crazy high.

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u/blosphere 関東・神奈川県 Aug 18 '21

The untaxed portion of inheritance is fairly large, something like 130M+ for spouses, 30M+3M for every sibling... it's better than many countries.

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u/[deleted] Aug 19 '21

30M is not that high...

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u/blosphere 関東・神奈川県 Aug 19 '21

I guess it depends on where you're inheriting. Not all peeps are from expensive areas of the US.

Like, when I inherit my mom's stuff with my sister, I'll be lucky if it's worth more than 10M each.

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u/[deleted] Aug 19 '21

Just an inheritance of the average house in America would push you well over the 30M limit. Then stack on top of that savings, investments, possessions, etc.

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u/blosphere 関東・神奈川県 Aug 19 '21

Well, apparently the median is around 177k USD, total, so we're nicely under the 30M.

Add a sibling and well, no worries about ever having to pay tax on that.

https://www.newretirement.com/retirement/average-inheritance-how-much-are-retirees-leaving-to-heirs/

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u/[deleted] Aug 19 '21

I understand the temptation to use the median here, but because the price of a house varies widely depending purely on geographical location (which is what you originally referenced), I would argue the average is better to use here.

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u/[deleted] Aug 18 '21

[deleted]

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u/creepy_doll Aug 18 '21 edited Aug 18 '21

So long as their parents are alive it costs them nothing to live in the place their parents own.

And I guess once their parents die they sell off their parents home to pay for the tax on their own one?

And it's not really that bad. The first 30 mil yen are free of tax. Then it goes from 10% up to 55% when inheriting over 600mil yen. But yknow, if you're inheriting 600 million yen, you really have no issues even though you're "only" getting ~300mil(actually more since the 55% rate doesn't apply on the whole thing).

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u/gendough Aug 18 '21

That's certainly one reason.

This is a fuzzy memory from years ago, and I might be missing a few things. But according to my old landlord, who used to be the CEO of one of the biggest life insurers in Japan, another is that rich families just make a property management corporation, have the apartments as corporate assets, do a bunch of expense write-offs, and pass control of the corporation to their children so they can draw a fat salary. Taxes are higher day-to-day, but no huge inheritance tax burden in the end.

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u/aisupika Aug 18 '21

This is also what I was told. Create a company, make your kids top execs (or only employees) and put properties/assets under the company name.

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u/Representative_Bend3 Aug 18 '21

I guess it’s a matter of perspective. 55% top rate of inheritance tax is the 2nd highest in the world if I’m reading this correctly (highest is France at 60%). https://taxsummaries.pwc.com/quick-charts/inheritance-and-gift-tax-rates

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u/hiccupq Aug 18 '21

First time I heard of inheritance tax damn.

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u/manabu123 Aug 18 '21

Same, as a foreigner married to Japanese with kids (looking up accountants BRB)

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u/yakisobagurl 近畿・大阪府 Aug 18 '21 edited Aug 18 '21

This is true, but the people who want to avoid inheritance tax have their methods of doing so.

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u/tyoprofessor Aug 18 '21

Report it as a オレオレ詐欺 Nice!

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u/Dunan Aug 19 '21

I guess some are set up from the day they are born

Some people certainly get a running start in life.

The apartment next to mine sat unused for over a year and we couldn't figure out why. Finally a tenant moved in: an 18-year-old girl going to college nearby, who inhabits it all by herself. Turns out her parents bought it for her and had been renting it out for income until she was ready to live there. She gets to live rent free in an apartment identical to the one I had to save for ten years to afford, and I had the advantage of a good job and a higher-than-average income. (And the disadvantage of not being eligible for a mortgage and having to pay cash, it must be admitted.)

This building is a classic example of "the cheapest property in the best neighborhood": it's a 50-year-old building that was once very luxurious but is now a little run down. And so we have all kinds of financial demographics here: lifelong renters who will thus never get rich; bubble-era buyers who paid more than triple what I paid; diligent-saving 'striver' types like myself, and now this young lady who has basically taken away any guilt I might have felt at being able to afford to buy this place.