Saving for ourselves

More than half of Koreans in their 40s say they spend most of their income on their children’s education. Just 6.2 percent can afford to save for old age. This gloomy reality check was reflected in a survey of 2,300 adults in Seoul and satellite cities by Samsung Life Insurance’s Retirement Pension Research Center. It is a sad mirror of middle-aged Koreans who have no future because they spent all their earnings to educate their children.

The agony does not end after their children get into universities. A majority of people in their 40s and 50s have to support children after they graduate from college because they can’t find decent-paying jobs. By the time Koreans retire, they have little savings. Most of their savings have already been spent on educating and marrying off children. The elderly must sustain themselves with temporary labor. Korean parents are like arachnid mothers who sacrifice themselves as prey to offspring to awaken their hunting instincts and ensure their survival.

In past years, a good education for one’s children offered security in old age. Once they got good jobs and families, offspring provided for their parents. But those days are long gone. In the 1980s, Korean elderly relied on offspring for 70 percent of their income in old age. That rate is now 30 percent. By the time today’s middle-aged people reach old age, they will get little help from their children, as is the case in the United States and Japan. The National Assembly Budget Office estimates the national pension fund will be depleted in 2053, when today’s 40-year-olds will be in their 80s.

In short, people are on their own to provide for their senior years. Given the low birth rate and fast pace of aging, Koreans in their 40s could be broke by the time they face retirement in their 50s. Their income will be reduced at a time when expenditures rise. The share of education spending against disposable income of Koreans in their 40s is seven times that of Americans. Even though they spend much less, American middle-class families are in trouble because of education costs. Korean families that invest beyond their means on their children’s education have a bleaker future.

They can end up impoverished in retirement even though they live comfortably now. Those in middle age must spend at least 20 percent less on education to save more for their future. The investment instead should go into personal pension schemes or job retraining to be able to continue work after retirement. Children supporting their parents in retirement is not the answer.

JoongAng Ilbo, Feb. 26, Page 30