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A 69-year-old retired woman living alone in Japan became overconsumed due to loneliness and lack of planning, and her wealth declined significantly in four years. A financial planner proposed three wallets and budgets to prevent bankruptcy in old age.
a lot of peopleretire and get perfectpension After that, he dreamed of living a carefree life as an old man. However, the wastage and unplanned consumption caused by loneliness can cause originally abundant wealth to diminish rapidly within a few years. Japanese media “The Gold 60” reported about a 69-year-old woman who lived alone. When she retired she had a lot of property. However, she lost focus on life and got trapped in the web of ruin. In just 4 years, his wealth declined by more than a third, and he faced a serious bankruptcy crisis after retirement.
The report states that Michiko (pseudonym), a 69-year-old single woman, lives alone in a suburban apartment that has been paid off for 35 years. When he retired at the age of 65, he had a net worth of 35 million yen (about US$220,000). In the early years of her retirement, she often enjoyed fancy lunches out and went on hot spring trips with friends. However, after six months, her friends declined invitations one after another for reasons such as taking care of their grandchildren or accompanying their husbands, leaving her feeling deeply lonely.
To fill her empty heart and remain young, she signed an annual contract of 150,000 yen (about US$945) per month for anti-aging courses at a beauty clinic. Under the persuasion of the store clerk, he bought cosmetics, health foods, and beauty tools one after another, and continued to buy luxury goods in the name of “rewarding himself for working hard in the past.” She spent more than 9 million yen (about US$56,700) on beauty expenses alone. She also bought designer bags and clothes and even bought a diamond necklace worth 2.5 million yen (about US$15,700) in installments. After four years of excessive spending, his savings balance dropped to less than 10 million yen (about US$63,000), and he faced serious bankruptcy after retirement.
Regarding Michiko’s case, financial planner Mikiko Yamahara said that people who have large sums of money often ignore monthly losses out of a sense of security that “they still have savings.” Especially when you feel lonely and restless, it is easy to fill your empty soul with the short-term excitement brought by shopping.
In this regard, Shan Yuan proposed four specific measures to prevent bankruptcy of elderly people:
The first step is to examine the difference between your regular income (such as an annuity) and your monthly living expenses. Assume that the monthly annuity is 160,000 yen (approximately US$1,000) and living expenses are 250,000 yen (approximately US$1,570) per month, which means a monthly overspending of 90,000 yen (approximately US$570), and a cumulative overspending of 10.8 million yen (approximately US$68,000) over 10 years. As Michiko’s expenses increase, her savings will quickly deplete. If you spend money recklessly, you may run out of money as medical and long-term care costs rise in your later years.
Divide whatever money you have into three wallets (accounts), namely “living expenses”, “special expenses (such as entertainment or replacing household appliances)” and “retirement security fund”. In particular, “retirement security funds” cannot be used in principle. It is used to defray the expenses of nursing care, medical treatment and elderly care facilities after the age of 75 years. You should consider carefully when to use this money.
The key to controlling entertainment spending is to create a budget and transfer this budget to a dedicated account to effectively curb impulse purchases.
If you use money to fill your loneliness, you will consume endlessly. You may also want to participate in low-cost or free yoga classes and swimming classes at community centers, interact with peers through exercise, and regain health and social interaction.
Yamahara reminded that having the courage to face financial reality and calculate how long the money can be used is the first step to protect yourself from bankruptcy in old age.
