Koreans only have 34 years of ‘financial surplus’ during a lifetime

Promotional banners for private education displayed on the streets of Daechi-dong in Gangnam District, southern Seoul, on Oct. 11. [NEWS1]

Life cycle deficit by Koreans peaks at the age of 17 due to hefty educational spending before the cycle enters into a surplus from the age of 27.

A life cycle deficit is defined as the difference between consumption and income, being positive in dependent years and negative during working years.

The life cycle surplus in Korea peaks at the age of 43 with 39.06 million won ($30,050) before it swings to the red at 61 years old. This means that Koreans have 34 years of financial surplus during an entire lifetime.

Koreans do their heaviest spending at 17, consuming 35.75 million won annually, according to national transfer accounts for 2021 by Statistics Korea on Tuesday.

The national transfer account analyzes economic flows from one age group or generation to another for a national population in a given calendar year.

Korean parents have a strong educational fever, willing to spend millions of won on private education for university essay exams and educational counseling to help them make it into prestigious universities.

The government has been striving to ease the fever, vowing to exclude the so-called high-difficulty level ‘killer questions’ on Korea’s state-administered college entrance exam as it was pointed out as one of the reasons students resort to private education.

The time period Koreans enter into a surplus remained largely consistent from the past outcomes at the age of 27 to 28, but the time people reenter the life cycle deficit has slowed from 56 years old in 2010.

The total life cycle deficit in 2021 grew 11.6 percent on year to 108.8 trillion won, the data showed.

Consumption grew 6.2 percent to 1,148.8 trillion won, boosted by the public expenditures for education and health, over the same period.

Labor income grew 5.7 percent to 1,040 trillion won in the same period. Income by the self-employed attributed to the jump, rising 13.3 percent while wage income grew 5.4 percent.

By age group, newborns through to 14-year-olds faced 151.8 trillion won in total deficit, followed by 179.7 trillion won in surplus from those aged between 15 to 64. The life cycle turned back to 136.7 trillion won in deficit for seniors aged 65 or above.

Deficits raised at different life cycles are filled up through asset reallocation and transfers.

Some 275.4 trillion won from the working people were transferred to youth and seniors by 152.4 trillion won and 118.6 trillion won, respectively.

For asset reallocation, 600 billion won flowed out from the youth while 95.7 trillion won and 18.2 trillion won flowed into the working population and seniors, respectively.

BY JIN MIN-JI [jin.minji@joongang.co.kr]