Many of Japan’s elderly population cannot make ends meet and have turned to shoplifting to support themselves. Prisons are trying to keep pace with growing senior inmate needs by installing handrails and ramps and medical equipment.
“Senior citizens shoplift lunch boxes and bread out of poverty,” said Yusuke Ishikawa in a Bloomberg article entitled ‘Silver Shoplifters Steal Bowls of Rice as Abe Cuts Welfare.’ … The current trend is probably going to continue because the overall population is aging rapidly.”
According to the CIA World Fact Book, Japan’s median age is 45.8. By comparison, the median age in the U.S. is 37. Population demographics influence a nation’s ability to stay solvent financially. Why? When a country like Japan has a significant portion of its population drawing the U.S. version of Social Security and Medicare, it places tremendous financial burden on government coffers.
“Japan’s social welfare spending rose to a record 103 trillion yen ($1.02 trillion) in the year ended March 2011, about 22 percent of gross domestic product, according to the National Institute of Population and Social Security Research … Pensions cost about 52 trillion yen, or more than half of the total spending. Medical costs were 32 trillion yen.”
“The current level of pensions is unsustainable, the payments have to be reduced,” said (Koichi) Haji at NLI Research. “Elderly people are gradually digging into their savings, and the rate at which they dig into those savings will accelerate.”
Sounds familiar, doesn’t it? The unsustainability of some public pensions has contributed to disastrous financial downfalls in municipalities like San Diego, Stockton, Calif., and Detroit. Chicago is currently waging a fierce economic fight over cutting back pensions for public employees.
Prime Minister Shinzo Abe supports changing the pension age from 60 to 65 over the next 12 years. Abe is also hoping that Japan’s economy will support a nationwide sales tax increase. Japan’s “fiscal 2013 budget calls for a 67 billion yen reduction in welfare public assistance over about three years, starting (last month),” according to Bloomberg.
While I have no crystal ball, my guess is that the U.S. Social Security structure will remain intact until the Baby Boomers give way to Generation Y, owing to our political clout and other factors. But if we are to reduce the debt and balance the budget here in the U.S., changes in Social Security, Medicare and Medicaid, as well as government and private pensions, are probably in the offing.
Along with Canada and Australia, the U.S. is considered to be an immigration friendly country, something that Japan is not now, nor has ever been. Immigrants lower the median age, initiate business ventures and hire workers, and contribute to Social Security and Medicare during their working years.
Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, (850-608-6121— www.arborwealth.net), a fee-only registered investment advisory firm located near Sandestin.