"In the Era of Ultra-Long Life, Prepare Lifetime Income with Pensions, Insurance, Safety, and Investment Assets"

Mirae Asset Retirement Research Institute Publishes Report on 'Creating Lifetime Income in the Super Longevity Era'

[Asia Economy Reporter Minwoo Lee] Mirae Asset Retirement Research Institute has published a report exploring ways to secure lifelong income in response to the 'super longevity era.'

On the 8th, Mirae Asset Retirement Research Institute announced the publication of 'Creating Lifelong Income in the Super Longevity Era.' The report emphasizes the need to prepare future income in line with the 'super longevity era,' where life expectancy is not only increasing but also becoming harder to predict.

According to the report, South Korea's life expectancy was 82.7 years in 2018 but is projected to rise to 92.5 years by 2100, surpassing the OECD average of 90.7 years. As average life expectancy increases, the variance in lifespan also widens. For an expected life expectancy of 83 years, the anticipated age of death ranges from 80 to 90 years, whereas for 93 years, the expected death age should be considered broadly from '85 to over 100 years.'

The report analyzes that the risk of old-age bankruptcy also increases in the super longevity era. For a 60-year-old couple preparing for 20 years post-retirement, assuming a monthly consumption of 2.43 million KRW, an annual inflation rate of 2%, and an annual investment return of 3%, the current required funds amount to approximately 530 million KRW. If life expectancy increases by 10 years, an additional 230 million KRW is needed, totaling 760 million KRW from the retirement point.

Therefore, the report stresses the importance of preparing for old age in the super longevity era through 'lifelong income.' Lifelong income refers to a cash flow for old age that can be secured without worry until the end of life. It points out the need to identify what old-age expenses will occur and to devise a strategy centered on 'Pension (P), Insurance (I), Safe Assets (S), and Investment Assets (A)' according to the purpose and timing of held assets. Pension assets cover basic living expenses, insurance assets prepare for risks of illness and accidents, safe assets are for leisure activities and emergency funds, and investment assets are for future asset value growth.

Specifically, the strategy involves securing basic living expenses through pension assets such as 'public pensions, (private) whole life annuity insurance, and housing pensions,' while managing the remainder as investment assets to grow retirement funds. It also explains that regularly withdrawing a fixed amount from investment assets like funds can create a 'self-pension' that pursues investment returns while functioning like a pension. Senior Researcher Nara Jung of the Pension Research Center at Mirae Asset Retirement Research Institute emphasized, "As life expectancy increases, it is important to create lifelong income considering both my lifespan and the lifespan of my money."

The report, available in e-book format, can be downloaded for free from the Mirae Asset Retirement Research Institute website.

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