Middle-Class Retirement Preparation Scores 69 Points... "Difficulty Securing Living Expenses After Age 74"

NH Investment & Securities 100-Year Life Research Institute Publishes '2020 Middle Class Report' on the 1st

[Asia Economy Reporter Kum Boryeong] The retirement preparation of the domestic middle class scored 69 points.

NH Investment & Securities' 100-Year Life Research Institute published the "2020 Middle Class Report" analyzing the middle class in South Korea on the 1st. The survey subjects included 1,349 people in their 30s to 50s, including the middle class.

The retirement preparation index of the middle class based on life expectancy was 69.4%. The retirement preparation index is calculated by dividing retirement preparation assets by necessary retirement assets and then multiplying by 100. When converted to economic lifespan, it indicates difficulty in securing living expenses after age 74.

Kim Jinwoong, Deputy Director of the 100-Year Life Research Institute, explained, "At this rate, it is highly likely that the middle class will find it difficult to maintain their status after retirement. In terms of utilizing the three-tier pension system, dependence on the National Pension is too high, while the use of private pensions such as retirement pensions and personal pensions remains low. Considering the extended retirement period due to increased life expectancy, active efforts are needed to build sufficient retirement assets centered on pensions."

The monthly retirement living expense desired by the middle class was 2.79 million KRW. Based on a retirement age of 59 and a life expectancy of 84, the necessary retirement assets amounted to 669.6 million KRW. Assuming a life expectancy of 100 years, the necessary retirement assets for the middle class increased to 937.44 million KRW.

The middle class in South Korea is largely dissatisfied with their current life situation. Reflecting the recent OECD change in middle-class criteria (from the 50-150% median income range to the 75-200% range), the income range for the middle class was revised upward in this survey, yet 4 out of 10 middle-class respondents (40.5%) perceived themselves as lower class.

The low class perception among the middle class was also evident in their retirement preparation status. Seven out of ten middle-class respondents (67.2%) answered that they lacked confidence in maintaining their middle-class status after retirement. More than half of the middle class (52.3%) reported not preparing for retirement. Only 13.7% of the middle class were enrolled in all three tiers of the pension system, indicating insufficient retirement preparation through pensions.

The ideal middle-class conditions, as perceived by the middle class, were a monthly income of 6.22 million KRW and net assets of 770 million KRW for a four-person household. This showed a significant gap compared to the middle class’s average monthly income of 4.88 million KRW and net assets of 330 million KRW. The middle class spent 46.5% of their income on living expenses and saved 23.5%.

Park Jin, Director of the 100-Year Life Research Institute, stated, "If even one of health, finance, family, work/leisure, or social relationships is lacking, one cannot have a happy retirement. The analysis of the middle class’s retirement preparation tendencies showed that finance is the most vulnerable area. If retirement pensions and personal pensions are managed and operated more actively from now on, balanced retirement preparation will be possible around retirement."

This content was produced with the assistance of AI translation services.