A senior citizen fills in a job application form during a job fair in Seoul on Dec. 13, 2023. (Image courtesy of Yonhap)
SEOUL, Apr. 25 (Korea Bizwire) – Maintaining a stable lifestyle after retirement in South Korea requires a nest egg of at least 1.1 billion won, according to a new analysis, with health care costs and support for adult children emerging as major expenses alongside basic living costs.
The figure, which factors in 30 years of retired life, is even higher when accounting for inflation, suggesting those in their 20s and 30s today will need substantially more savings by the time they retire, a report from NH Investment & Securities found.
The report, titled “A Wise Retirement Life” and published last month, cited government data showing households headed by someone in their 50s who have not yet retired believe 3.22 million won per month is needed for an adequate retirement. That amounts to 772.8 million won over 20 years, or 1.16 billion won across 30 years of retirement.
Adjusting for 2 percent annual inflation over three decades, the estimated cost for a comfortable retirement balloons to 2.1 billion won.
Even applying a sliding scale — 100 percent of basic costs in one’s 60s, 70 percent in their 70s and 50 percent for those over 80 — the report calculated 850 million won would be needed to cover 30 years of retirement.
A 2020 survey of the elderly cited in the report showed those 65 and older felt the greatest financial strain from food costs, at 46.6 percent of expenditures, followed by housing expenses at 24.5 percent and health care at 10.9 percent. The basics of food, shelter and medical bills accounted for the bulk of living costs.
Health care expenses were found to surge after retirement. Based on 2023 data analyzed in the report, the average annual medical costs for those 65 and above came to nearly 5 million won, more than double the average across all age groups.
Beyond these core living costs, retiree households also face considerable outlays for leisure activities, taxes, health insurance premiums and other expenses, the report showed.
Perhaps most significant is the growing burden of supporting “kangaroo families” — adult children remaining financially dependent on their parents. According to a 2020 census, 38.9 percent of those in their 20s and 7 percent of 30-somethings relied on parental assistance to cover living costs. An estimated 650,000 people in their 30s and 40s were still receiving such support.
The report estimated parents spend around 30 million won per child to cover university tuition and 330.5 million won for marriage costs alone. Factoring in living stipends and job assistance, the total could amount to tens of millions of won in support for each working-age adult child.
To ensure a stable retirement, the report emphasized the importance of financial assets like national pensions and corporate pensions, as well as post-retirement employment income.
M. H. Lee (mhlee@koreabizwire.com)
