Average person in Korea will be broke by 82

A survey has found that many retirees won’t be able to live off their national pension benefits and that at the age of 82 the average person in Korea will be out of money.

It suggests the need for additional sources of income, more years of work or higher pension returns.

According to a retirement report released by the Hana Institute of Finance on Monday, the average monthly living expenses of people between the ages of 65 and 74 total 2.1 million won ($1,840).

Although this is more than the 1.83 million won estimate from Statistics Korea, it was lower than the 2.64 million won that the senior citizens saw as the amount needed to cover all expenses, including the costs of leisure and entertainment.

This indicates that many elders are living on a tight budget and may not be able to live off their national pension payments alone.

The study was based on a survey of 650 national pension fund recipients aged between 65 and 74.

Of the total, 48.6 percent said their income level has fallen below 50 percent of what they earned before their retirement.

With incomes shrinking, many senior citizens who used to regard themselves as being “middle income” now consider themselves to be “lower income.”

Of the total, 50.5 percent said they were middle income when they still had jobs. This figure drops to 38.6 percent after retirement. Of the total, 35.4 percent considered themselves to be lower income when working. That number increases to 46.2 percent after retirement.

Due to the reduced income, only 0.6 percent said they spend at the same level as they did when they were employed, while 62 percent said they were using all of national pension payments received on living expenses.

The study has found that 42.3 percent have continued to work even after retirement. While 62.8 percent of men still worked to make a living, 21.8 percent of women said the same.

More than half - or 55.7 percent - of people in their 60s still worked despite receiving national pension payments, while 28.9 percent of people in their 70s said they did same.

The average age at which they stopped working was 74.7 years old.

The study suggests that life is especially difficult for those entirely dependent on the national pension. Among the recipients, 75.7 percent received less than 500,000 won a month, while only 5.3 percent received more than 1 million won.

As such, many live off on their savings.

The National Pension Service last year reported total returns of minus 0.92 percent.

This is the first loss since the global financial crisis in 2008 when its total returns were minus 0.18 percent.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]