Parents spend on their kids instead of saving
His children’s education expenses are what hold him back from the easy life - or rather, push him to find another source of income.
“I can’t sacrifice my children’s dreams for my own retirement,” he says. His daughter, who is now in the 9th grade, spends 900,000 won ($818) a month on hagwon, or private cram schools.
His son, a junior in college, used to need 6 million won every semester for tuition in Korea. He’s now spending four times that amount for tuition and room and board at a college in the United States, where he transferred last year.
In Goyang, Gyeonggi, a 54-year-old father, who is also surnamed Kim, says he also considers his children’s education the top priority in household spending, even if it means he has to take out more than 60 million won in loans.
Earning 6.5 million won per month from a financial company, Kim says his daughters’ tuitions swallow 60 percent of his total income.
“Back when I was in college, it wasn’t easy for me to pay my tuition, so I really try to build a better environment for my kids,” he says. “But then again, I picture how dark and hopeless my life after retirement could be. I sometimes wonder how I got into this mess in the first place.”
According to a recent survey led by the retirement research center of Samsung Life Insurance, over half of the respondents (54 percent) in their 40s and 50s said they’re financially supporting children aged 20 or older.
Nearly one out of every five respondents in their 60s and 70s said they, too, are giving allowances to children in similar age groups.
Of the 2,300 adults questioned in Seoul and metropolises nationwide, over 30 percent answered that they will prepare for their own after-retirement lives near the age of 60, when all their children are married.
“When parents cover their children’s financial expenses, from college and onward, youngsters tend to take that for granted,” said Yoon Won-ah, a researcher at the retirement research center.
“There’s always a threshold to parents’ assistance, and the elders need to open up to their children about those limits,” she added.
Parents are spending more because their children are having trouble finding jobs out of college compared with years past. Some use that time for more classes and training, which cost money.
Ms. Han, a 55-year-old in Goyang, Gyeonggi, bemoans the 2.4 million won she spent on her daughter’s English classes at a Toeic (Test of English for International Communication) hagwon, and 1.3 million won more for a flight attendant training academy.
“I think her supplementary education costs were cheaper when she was in high school,” said Han.
A study led by Statistics Korea indicated that it took 10 months for college graduates to find their first job in 2005. Last year, that time period grew to an entire year.
Also, the average age for getting married has increased over the years.
In 1990, the average was 27.8 years for men and 24.8 years for women, while in 2013, it was 32.2 years for men and 29.6 years for women.
“Raising two kids can really be demanding these days,” says Kim Jeong-hyun, a 52-year-old in Seocho District, southern Seoul. “They take a long time getting a job or finding a spouse, so the money parents need to spend to support them keeps mounting.”
Kim Dong-yeob, the director of another retirement research center under Mirae Asset, advises parents to communicate with their children about their own financial condition.
“If parents overspend on their children’s education from an early age, the kids might later ask why their folks didn’t save for their expenses in college,” says Kim. Parents “shouldn’t consider their retirement plans taboo as a topic for discussion.”
Seo Mi-gyeong, a 47-year-old in Ulsan, is confident she has convinced her two daughters - a freshman and a junior - that support for their tuition fees is all they will get out of her and her husband.
“I repeatedly told them they’re on their own right after graduation,” said Seo.
Seo didn’t send her girls to hagwon when they were in middle and high schools.
Instead, she opened a saving account for each when they entered the first grade, and deposited 100,000 won in each account every month. They now have nearly 30 million won combined. As a consequence, Seo said she feels a sense of security about her later life. “I must have saved 100 million won by not sending them to hagwon.”
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