50-year-olds going broke supporting children and parents
The largest share of the population, Koreans in their fifties are facing more severe financial pressures compared to other age groups.
Kim Kyung-rok, director of the Mirae Asset Retirement Institute, warned that those in their fifties could find themselves on an inexorable path toward elderly poverty if current spending habits continue.
The director said that most workers face retirement in their mid-fifties, which will likely cut their income in half even if they find another job. Kim predicted that they will face further financial pressure despite retirement. They will have to pay for children’s education, marriage costs and parents’ hospital bills.
In such cases, it will be impossible for those in their 50s to escape poverty.
The average monthly expenditure of households whose head was in their fifties was 2.96 million won ($2,640) in 2017. The figure is similar to those with a head of household in their forties, where monthly average expenditures totaled 3.17 million won.
An office worker who identified himself as Shin has an income of over 100 million won per year, however the 55-year-old is still worried about his future.
He said he spent 1 million won every month in hospital bills over a decade for his mother who recently passed. Last year, Shin’s mother-in-law moved into his home as she was diagnosed with dementia.
“Although hospital bills cost more than a million won a month, my wife took care of my sick mother, and I’ll do the same with my mother-in-law,” said Shin.
Shin’s financial situation is further stressed by the support he provides for his children. The father of two sends two million won in allowance every month to his younger son, who studies abroad in the United States.
“I gave my older son 200 million won for housing when he got married,” explained Shin. “I’m using my retirement fund … I’m not sure how I will get through the ‘income cliff’ when I retire in two to three years.”
An increasing number of 50-year-olds are finding themselves in a similar situation.
“Japan experienced ‘elderly bankruptcies’ in the 20 years since it became an aged society in the ’90s,” said the director of the retirement institute. “Korea may experience a similar situation in 10 years.”
Korea was categorized as an aged society in 2017, when 14 percent of its population was aged over 65.
Those currently in their fifties have been in the economic and social spotlight for years.
The generation rode much of the dramatic economic growth Korea experienced as a result of low-interest rates, low oil prices and a weak currency.
Until the 1997 financial crisis, the generation faced few job market woes and little financial pressure.
The economic boom is long gone, and the generation now finds itself facing challenges as it prepares for retirement while supporting older and younger generations.
“Retirement will last 22 to 24 years, but only four out of 10 office workers in their fifties are preparing,” said Kim Jin-woong, a researcher at NH Investment & Securities.
Lee Sam-sik, director of the Institute of Aging Society at Hanyang University, said that the government should take an active role to prepare the current generation for retirement.
“At this rate, those in their sixties will be the largest age group by around 2028,” explained Lee. “The current sixties age group accepts elderly poverty, however younger people will not.”
BY LEE SANG-JAI, PARK HYUNG-SOO [firstname.lastname@example.org]