[OUTLOOK]Social consensus or social chaos?The whole country is in chaos. North Korea has fired missiles. A free trade agreement with the United States is provoking discord among people. Heavy downpours have hit central parts of the country. Leaders are making outrageous remarks. People write ill-intended postings on the Internet. But what can we do? That is the reality of our country and we have to live on in this country. At the end of the day, it is up to individuals to take care of themselves.
The Ministry of Agriculture and Forestry and the Korean Overseas Information Service released a survey on where people wish to live after retirement. The survey was conducted on 10,000 baby boomers who were born between 1955 and 1963 and are residents of Seoul and six other metropolitan cities. Among the respondents, 56.3 percent said they wanted to live in the countryside after retirement.
The Ministry of Agriculture and Forestry plans to build 300 farm villages across the nation over the next seven years except in the Seoul metropolitan area ― the principle of balanced development across all areas was not considered here.
What do people want to do while living in the countryside after retirement? More than two-thirds of respondents who said they want to live in the countryside answered that they wanted to do chores and enjoy the rural life. They are so exhausted from living in the city that they want to move to the countryside despite a little inconvenience. This is very understandable.
Whether managing a nation or a household, money talks. The survey also asked about how much money people expect to spend monthly after retirement. Nearly half answered between 1 million won ($1,050) and 2 million won. A third answered between 2 million and 3 million won. Let’s say people think 2 million won per month, on average.
Baby boomers range from their early forties to early fifties. This is a tricky period of life. Their children attend school. Expenditure on education, in particular spending for private tutoring, is high enough to encourage suicide. Parents often close their savings account and even take out loans. This is just the way it is, whether right or wrong.
In the meantime, people in this age span feel that society is aging at a fast rate. These people need to support not only themselves but also their parents. This concern sounds mean, particularly in a Confucian culture that emphasizes families and respect for ancestors.
If they think only about themselves, these middle-aged citizens should do their best to save money for the future, but they simply can’t cut down on their spending. The answer then is to earn more. But this age group has long been the most vulnerable at work. They have lost their foothold in their workplaces. Almost every one of them has a fear of losing his or her job, except government workers who have no risk of getting fired or laid off.
There is a national pension program. A 45-year-old who works at an ordinary company, for instance, will receive a maximum of 1 million won monthly after paying pension contributions for decades. In addition, it is inevitable the pension amount will decrease and start being available at an ever-older age.
Another way to make money is through interest or dividends. As not everybody has invested in stocks, receiving interest on savings accounts is the most common way. However, this does not seem hopeful either. Based on interest rates for time deposit accounts these days, you need 300 million in savings in order to earn 1 million won per month in interest. Saving that amount of money is not easy, after buying a house, putting children through school and paying for their weddings. In Korea, it is quite usual for parents to provide their children with a place to live and buy household items for them when they move out after marriage.
Inheritances must be considered also, but these vary a great deal from person to person. As there are no data on inheritance in Korea, let’s look at a survey released in the United States.
First, 86 percent of the respondents did not expect to gain any inheritance. The average amount of money inherited was around $29,000 last year. This keeps decreasing because medical expenditures increase as people live longer.
The situation in Korea must be quite similar. After taking into account all possible options, it still seems hard to make 2 million won per month after retirement.
People should do something about this. First, they need to be highly aware of the problem. They should abandon their illusions about their future. They should learn about different interest rates on different financial products.
They also need to learn ways to manage their assets, including their houses. They should think about opening their own shops or companies, or getting another job at another company. They also need to reconsider overly-high spending on their children and think more about their lives after retirement.
However, a more important thing is a social consensus that the most effective measure in an aging society is to prolong the employment period. The retirement age of today was set when the average life expectancy was sixty years. Unless the retirement age changes, the social burden in our aging society will grow bigger and then be passed on to others.
There is a proposed new measure to keep people employed for a longer period while cutting down their wages step-by-step. It is regrettable that labor unions, businesses and the government have been delaying the introduction of this system to change the retirement age.
* The writer is the chief of the editorial page of the JoongAng Ilbo.
by Park Tae-wook