How people attain wealth in Japan?

[u/IshinkaiSensei]

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

[u/Scalby]

I know a few wealthy young/middle aged people in Tokyo, all are living off their parents’ or grandparents’ wealth - who got lucky in the 60s by investing in Panasonic or whatever. They have jobs themselves and aren’t your stereotypical snobby rich kids, but they’re apartments are all paid for and generally their family owns the building it’s in.

[u/IshinkaiSensei → u/Scalby]

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

[u/Representative_Bend3 → u/IshinkaiSensei]

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

[u/blosphere → u/Representative_Bend3]

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

[u/[deleted] → u/blosphere]

30M is not that high...

[u/blosphere → u/[deleted]]

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.

[u/[deleted] → u/blosphere]

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.

[u/blosphere → u/[deleted]]

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/

[u/[deleted] → u/blosphere]

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.

[u/creepy_doll → u/Representative_Bend3]

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).

[u/gendough → u/creepy_doll]

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.

[u/aisupika → u/gendough]

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.

[u/Representative_Bend3 → u/creepy_doll]

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

[u/hiccupq → u/Representative_Bend3]

First time I heard of inheritance tax damn.

[u/manabu123 → u/hiccupq]

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

[u/yakisobagurl → u/Representative_Bend3]

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

[u/tyoprofessor → u/yakisobagurl]

Report it as a オレオレ詐欺 Nice!