No time to retire for baby boomers
At 56, Mr. Yim is no longer young. He and his wife saved enough over the years to buy a house, pay for their two children’s education and live comfortably, though not sumptuously. Last year, their second child completed college. Yim was ready to slow down.
“With both our kids out of college,” Yim says, “I thought, ‘Just several years more of saving, and my wife and I will be set for retirement.’?”
It’s not working out that way. Yim and many men his age - the baby boom generation - are discovering that working hard for a company doesn’t necessarily lead to an easy passage to the “Golden Years.”
“Several months ago, my new boss indicated that it was about time I retire,” Yim says. “How could I stay on after that? I got the message and handed in my letter of resignation.
“We don’t have any debt. But we don’t have any savings either,” he continues. “I thought there was time to save once our kids’ education was paid for. But looking at my bank account, I can’t help thinking: What have I worked so hard for?”
The baby boomers, referring to the sharp increase in births after the Korean War of 1950-53, were the backbone of Korea’s industrialization in the post-war era. Specifically, they are people born between 1955 and 1963, and the baby boom generation is 7.1 million people strong, accounting for nearly 15 percent of the population.
In addition, some baby boomers bought into the idea that retirement was going to be a breeze because Korea was growing prosperous so fast and they were part of the so-called “Miracle on the Han.” Would that miracle fail them when they needed it most - as senior citizens?
For many, the answer will be yes.
“The baby boomers began working in an era when the nation was in the midst of extremely rapid economic development,” says Yoon Sung-eun, a researcher at the Samsung Life Retirement Research Center. “Because they were so busy working, they did not have the mentality or leisure to pause and consider the meaning of life or plan ahead.”
Force to be reckoned with
In last month’s presidential election, all eyes were on voter turnout. Accepted wisdom was that if the turnout rose, it would be because young voters decided to take the trouble to vote for liberal candidate Moon Jae-in. High voter turnout, the pundits said, would mean Moon would win.
Voter turnout was 75.8 percent, the highest since the 1997 election - but it wasn’t because of the youth. The baby boomers ganged up and encouraged their friends to vote through social networks to support conservative candidate Park Geun-hye, proving themselves a force to be reckoned with. Voter turnout for people in their 50s was a whopping 89.9 percent, according to exit polls.
During the campaign, Park promised more welfare and other measures to make life easier for retiring baby boomers.
When the results were analyzed, it was seen that 62.5 percent of voters in their 50s supported Park. A decade ago, when the baby boomers were in their 40s, 48.1 percent supported liberal candidate Roh Moo-hyun, who won the election, over 47.9 percent for conservative Lee Hoi-chang. It’s a generation that has made presidents: a liberal when they were younger, a conservative as they head into retirement.
“The economy is bad, and I thought maybe Park will run state affairs with more stability,” says a 51-year-old shop owner in Gyeonggi surnamed Park. “At least I felt it would be less of a risk.”
The baby boomers are now 49 to 57 years old, which in most countries is still short of retirement age. But it’s a tradition at Korean companies to retire people early to make way for recruits out of college. That keeps the companies’ workforces young - and less expensive.
In Korea’s public sector, the median retirement age is 57, but private companies prefer to retire people at 55. The average retirement age in Seoul is 52.6 years, according to the Seoul Welfare Foundation in a survey released last month.
Of the 7.1 million baby boomers, the Korea Development Institute estimates that 530,000 will be retired by 2015 and 1.5 million within the next decade. Every year, an average of 150,000 baby boomers will retire.
Korean companies don’t pay pensions, although they do give severance money. The National Pension Service, which is like social security in the United States, only starts paying out when people are 60 years old, and starting from this year, age 61. So some retirees are on their own from retirement until the age of 60 or 61.
Real estate issues
Another big problem for the baby boomers is that the property market has been in a funk since 2008, seriously damaging any long-term plan they may have had to cash out on the homes they worked hard to pay for, move into something smaller or more remote, and live very comfortably on the difference. The most unfortunate are actually underwater in their home values.
Areas in the greater Seoul area, such as Gwacheon, Gyeonggi, saw a 25 percent fall in average apartment values in 2012 over the previous year, and Bundang saw a 20 percent fall in the same period. The Bank of Korea says housing prices across the nation dropped 1.7 percent last year.
Analysts estimate that the baby boomers comprise around a fifth of all Korean homeowners. And as they retire, many are going to have to sell no matter what price they get - and that could depress the market more, analysts say.
Another problem is that the Korean economy seems on steroids from abroad, with the success of Samsung and LG smartphones and Hyundai and Kia cars. But domestically, the economy has big weak spots in such sectors as construction and shipbuilding. That leads many companies to retire baby boomers early.
It has also led to high levels of unemployment among college graduates. The unemployment rate for people aged 25-29 was 6.5 percent at the end of 2012, according to Statistics Korea, up by 0.7 percent from 2011. The general unemployment rate last year was 2.9 percent.
Youth unemployment affects baby boomers because young Koreans often live with their families until they are prosperous enough to marry. In more prosperous families, the parents buy newlywed couples apartments for them to start their independent lives.
But young Koreans are getting married later and later - and a lot more than ever before are choosing not to marry at all. They often end up living with their baby boomer parents.
And with the overall graying of Korean society, many baby boomers are also taking care of parents who are living much longer than in past generations.
“The baby boom generation is very devoted to their families and squeezed between providing the best opportunities for their children while supporting elderly parents,” says Yoon of the Samsung Life Retirement Research Center. “Often, because they did not have as many educational opportunities as they would have desired, they are very invested in their children, who in harder economic times live longer at home, often until marriage, and get employed later. This places a great burden on the baby boomers.”
The end result of all these factors is that it’s not time for the baby boomers to relax and retire. For many, if not most, it’s time for them to go back to work in far crummier, lower-paying jobs than they have been used to throughout their adult lives.
“Baby boomers cannot stop economic activities even after retirement,” a Ministry of Employment and Labor official says. “And to find a job, it’s more likely they’ll find one in some small business rather than a big company.”
Working after retirement
At the Songpa District Employment Support Center in southeastern Seoul on Dec. 27, virtually all the people coming for consultations are over 50.
Mr. Lee, 54, had a career as an office employee at a medium-sized company all his life. But his body is still strong, he says, and he’s looking for a job on a construction site because it pays a lot better than softer jobs.
“Around 75 percent of the people who come in are over 50,” says Jang Mun-hyung, an official at the center. “There is also the Songpa Senior Welfare Service Center, which offers separate support for senior citizens, so we do get a lot of people from the baby boomr generation.”
But the possibilities are limited.
“They can’t expect to find the same level of jobs they had before,” adds Jang. “Most of the jobs that they find after retiring are working as building guards, janitors, drivers or parking lot attendants.”
The center sees a range of people with different levels of education and work experience.
“In reality, people with better educations and who come from well-respected jobs have the most difficulty adjusting,” Jang says. “It’s about a mind-set.”
In the midst of the conversation with the Korea JoongAng Daily, Jang receives a call from a woman she had just placed in a cleaner’s job in an office building. To bring in extra money since her husband’s retirement, she had sought a job at the employment center.
“I cannot work here,” the woman tells Jang over the phone. The reason: the job she has taken is in the same office building where her son recently started work.
“I have my pride,” she tells Jang.
The number of women in their 50s entering the workforce surpassed two million in 2012, according to Statistics Korea, or 57.3 percent of women in that age group, up from 52.7 percent in 2007.
According to the Ministry of Strategy and Finance, the number of self-employed people in their 50s is also on the rise and has topped 100,000. Many baby boomers are trying to go into business on their own, opening small restaurants, coffee shops, beauty salons or clothing stores.
On a monthly basis, 60 percent of newly self-employed Koreans are now over 50, according to Statistics Korea in November, up from only 47 percent in 2008.
Analysts say it’s relatively easy to get into the retail, food and accommodation industries - they have “low entry barriers” - but many baby boomers still have to borrow to start new businesses.
And as is universally known, a high percentage of new businesses simply don’t succeed.
The Korea Financial Telecommunications & Clearings Institute surveyed 237 business owners who went bankrupt last year and found that 44 percent were baby boomers.
“We often get people who come seek us out after their independent businesses fail,” says Jang of the Songpa District Employment Support Center. “Self-employment is not for everybody.”
The next three decades ...
The average life expectancy in Korea is 81 years, higher than the OECD average. So for baby boomers in their 50s wondering what to do after retirement, they need to find a solution that will keep them going another three decades.
The government is starting to push for measures to raise the retirement age and better employ the talents of those not quite ready to retire, although Korea’s big conglomerates aren’t on board yet.
The National Pension Service plans to gradually raise the retirement age to 65 over the next two decades.
At the beginning of the year, the National Assembly approved the highest welfare budget than ever before as the population over 60 is expected to be 39 percent of the total population by 2050, compared to 17 percent now. The incoming Park administration is planning even more welfare spending, especially for seniors.
“It is a mistake for baby boomers to think that they can think about their next step after they retire,” says Hwang Won-kyong, a retirement specialist at KB Financial Group’s in-house research institute. “You have to prepare at least a decade in advance in order to be ready for retirement.”
“There are different survival options depending on your financial standing,” he continues. “Those who have assets need to plan how to stretch out their financial and real estate assets. Those who don’t should seek consultations on how to make a savings plan based on their retirement savings, cash assets and pension plan.”
But planning has not been a strong suit of the generation. The KB’s Management Institute released a survey that showed that less than one in four baby boom households had minimum living expenses 100 percent prepared for after retirement. Only 12.7 percent declared they had “adequate” living expenses 100 percent prepared. And more than half declared they had less than 50 percent of their minimum living expenses prepared for after retirement.
By Sarah Kim [email@example.com]