On April 4 of last year, at Seobuk Hospital in Eunpyeong District—designated as Seoul’s first dementia care hospital—an elderly patient is seen performing rehabilitation exercises. (Yonhap)
SEOUL, May 12 (Korea Bizwire) — As South Korea grapples with the financial implications of its aging population, the government has released the nation’s first full-scale survey on so-called “dementia money”—the frozen assets held by elderly citizens with dementia—and experts are urging swift action modeled on Japan’s experience.
According to the Presidential Committee on Aging Society and Population Policy, as of 2023, seniors aged 65 and older living with dementia in South Korea held 154 trillion won in assets—equivalent to 6.4% of the national GDP. By 2050, that figure is projected to reach 488 trillion won, or 15.6% of GDP, raising concerns over economic stagnation and asset vulnerability.
“Dementia money” refers to the idle or inaccessible financial assets of elderly individuals suffering cognitive decline. With dementia impeding routine transactions, these funds often remain unused—not only stalling consumption and investment but also complicating access to essential living and healthcare expenses. The risks of fraud and unauthorized use are growing as well.
Japan, which entered a super-aged society in 2006, offers a cautionary case. As of 2022, it had an estimated 10 million people either diagnosed with dementia or experiencing mild cognitive impairment (MCI)—one in every 3.6 elderly citizens. By 2040, the number is expected to rise to 12 million.
As elderly assets remain locked by cognitive decline, experts urge reform of guardianship laws and AI-powered safeguards, drawing lessons from Japan. (Image supported by ChatGPT)
A 2022 estimate by Sumitomo Mitsui Trust Bank projected the financial assets held by Japan’s dementia patients would reach 345 trillion yen (approximately 3,300 trillion won) by 2040, accounting for over 12% of all household assets.
To address the crisis, Japan has expanded two key systems: the adult guardianship program—where courts appoint representatives to manage the personal and financial affairs of those with impaired decision-making capacity—and family trusts, which allow individuals to transfer asset management responsibilities to relatives before cognitive decline sets in. However, challenges such as low uptake and legal complexity persist.
On the technological front, Japanese AI startup ExaWizards has partnered with Fukuoka Bank to develop an AI-driven system that monitors account activity to detect anomalies such as large withdrawals, overseas transfers, or repeated transactions, enabling early fraud intervention.
Experts in South Korea are now calling for similar safeguards. “We need to establish a culture where older adults plan for asset preservation, use, and inheritance while still cognitively healthy,” said Oh Young-pyo, Executive Director at Shin Young Securities. He suggested offering tax incentives to encourage participation in family trust schemes.
Kim Myung-jung, a senior researcher at Japan’s NLI Research Institute, emphasized the need for expert-managed guardianships and recommended the introduction of U.S.-style prepaid card systems for elderly users, coupled with real-time monitoring to prevent misuse.
As South Korea braces for a sharp rise in dementia-related asset lock-in, policymakers and financial institutions face mounting pressure to innovate—legally, culturally, and technologically—to protect the financial dignity of its aging population.
Lina Jang (linajang@koreabizwire.com)
