Participants at a seminar on the pension system (PANA)

Ready and Waiting
There were 6.79 million people in Japan aged 55-57 as of Oct. 1, 2004, nearly 50% higher than the 4.63 million people aged 58-60, according to the Ministry of Internal Affairs and Communications. The amount of retirement pay that will be paid out each year from 2007-2009 is estimated to range from ¥35 trillion to ¥60 trillion (about $318 billion to $545 billion at ¥110 to the dollar).

For the financial institutions, these sums translate into a potentially huge increase in business. That is particularly true for trust banks. While much of the business conducted by megabanks and other regular banks is on behalf of the working-age population - transfers of salary and mortgage payments, for example - many of the trust banks' clients first begin dealing with these banks when they receive their retirement payouts. Trust banks also enjoy a monopoly on real-estate mediation and inheritance-related transactions, such as the execution of wills - business generated mostly by middle-aged and elderly customers. Sumitomo Trust & Banking Co., one of Japan's biggest trust banks, launched a TV advertisement campaign aimed at the baby-boom generation from April, the first TV campaign by the bank in 14 years.

Securities companies are also eager to capture a big chunk of baby-boomer business. One of the hottest products for this group is "wrap accounts," which enable all of an individual investor's assets to be managed in a single account. This type of account has long been used by institutional investors, but a revision in the law in April 2004 made it easier for brokerage houses to offer them to individuals, and many have already started doing so. The products in this market tend to be tailored to the wealthy, requiring investments of ¥10 million and up (about $90,900). The high requirements, however, haven't discouraged investors. The amount of assets flowing into these products has expanded rapidly, spurred on by a complete lifting this spring of the "payoff" system, which resulted in a cap of ¥10 million on the refunds paid to depositors in the event that a financial institution fails. Knowledge of the products has also spread among consumers.

Time to Play
Tourism is another business expected to benefit from the surge of retiring baby boomers. Cruises, a favorite travel option among the retired, saw a whopping 25% increase in passengers during 2004 to a total of 73,000 (those spending at least one night on board a ship). "Many of our customers are married couples celebrating retirement or wedding anniversaries," says a representative of a major travel agency. The industry as a whole predicts greater demand as the boomers start to retire.

Some in this age group are finding nostalgia in the cars they drive. As its name suggests, the Roadster by Mazda Motor Corporation is a simple two-seat convertible whose design harks back to the 1960s, when baby boomers came of age. More than 700,000 Mazda Roadsters have been sold, mainly in the United States and Europe.

For boomers who once harbored dreams of being rock stars, meanwhile, there is the Silent Guitar, introduced by Yamaha Corporation. Some 24,000 of the instruments have been sold since its introduction in late 2001 - an amazing figure considering that Yamaha originally aimed for sales of around 2,000 units. Publishers are also gearing up for an audience with plenty of reading time on its hands. Publisher Shogakukan Inc. sold the inaugural issue of Rakuda, a bimonthly magazine aimed at readers aged 50 and over, in May.

As the generation that has driven much of Japan's economic development over the past few decades reaches retirement, it appears that these baby boomers will continue to sustain Japan's economy for some time to come, this time by spending and investing their retirement payments.

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Copyright (c) 2005 Web Japan. Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.