Advice for future retirees

People in their 40s and 50s who are in the middle class could easily slip to a lower class if they don’t restructure their debt and spending habits before their income drops in retirement, according to a new report.

A Mirae Asset Retirement Institute study released yesterday shows their monthly income expanded 77 percent and savings 134 percent from 2000 to 2012. During the same period, monthly spending grew 60 percent from 1.55 million won ($1,386) to 2.84 million won.

An average of 56 percent of the increased income was spent each month.

Kwon Ki-dong, a senior researcher at the institute, said it is important to stabilize income for people in their 40s and 50s for the overall good of the economy.

“People in their 40s and 50s today are the backbone of the country,” Kwon said. “When the country becomes a hyper-aged society in 2026, half of these people will be seniors 65 or older and will make up the largest retiree group in the nation’s history.”

As of last year, households with heads in their 40s and 50s accounted for 60 percent of all households, compared with 22 percent for the 20s and 30s and 27 percent for age 60 and over.

The report found that middle-income household spending continually increased and was heavily concentrated in five areas: education, eating out, housing expenses, transportation and mobile communications. In the case of education, spending per child tripled since 2000 while mobile spending increased 2.4 times.

Another problem is the rising burden of household debt, as indicated by the tripling of loan principal paid during the study period.

BY LEE HO-JEONG [ojlee82@joongang.co.kr]