40s "Struggled to Buy My Own Home... But Retirement Worries Me Most" (Summary)

Hana Bank 100-Year Happiness Research Center Report Published
Retirement Assets, Home Ownership, and Children's Education Are Top Concerns

[Asia Economy Reporter Kiho Sung] Half of Koreans in their 40s have succeeded in owning their own homes, but preparing for retirement, which they consider their top priority due to housing funds and children's education expenses, is not easy. The average monthly income (after tax) of 40-somethings living in metropolitan areas was 4.68 million KRW, and among those with children, 6 out of 10 spent an average of 1.07 million KRW per month on private education. Their average loan amount was recorded at 80 million KRW.

Experts advised that although the economic activity period remains, since this is the time when children's education begins in earnest, long-term and safe asset management should be undertaken.

70% of Monthly Earnings Spent... "No Capacity to Save Money"

Hana Bank's 100-Year Happiness Research Center released on the 3rd the report titled "How Koreans in Their 40s Live," which contains the results of a survey conducted by Korea Research last November targeting 1,000 income earners in their 40s living in Seoul and the four major metropolitan cities (Daejeon, Daegu, Busan, Gwangju).

According to the report, the average after-tax income of 40-something earners was 4.68 million KRW per month (median 4 million KRW). Of this, 73%, or 3.43 million KRW, was spent on living expenses and children's education. Children's education expenses accounted for 610,000 KRW (13%), and other expenses were 2.82 million KRW (60%). The amount spent on savings and investments was only 1.26 million KRW (27%). This means there is no capacity to save due to covering children's education and living expenses. Income was higher when married compared to single (3.42 million KRW per month), and dual-income households (6.15 million KRW per month) earned 1.4 times more than single-income households (4.3 million KRW per month). Sixty-five percent of 40-something earners evaluated their current income as insufficient for living expenses and financial management. When asked about income prospects for the next 10 years, 39% expected an increase, but 30% anticipated a decrease.

The average assets held by this age group were 410 million KRW (median 250 million KRW). More than half (52%) of those in their 40s reported total assets under 300 million KRW, and 12% had assets exceeding 1 billion KRW. Financial assets averaged 70 million KRW (median 40 million KRW), with about 28% holding more than 100 million KRW. Household loan balances were recorded at 80 million KRW.

Those in their 40s considered preparing retirement assets as the most important task. However, despite the importance they assigned themselves, the mid-term evaluation score was only 45 out of 100. The expected retirement assets estimated by those in their 40s averaged 290 million KRW, with an expected retirement age of 59.5 years. Essential living expenses were estimated at 2.03 million KRW, and sufficient living expenses at 3.52 million KRW. Six out of ten in their 40s saved an average of 610,000 KRW monthly to prepare retirement assets. Additionally, 59% expressed intentions to increase related savings in the future.

Half Own Their Homes... Heavy Loan Repayment Burden

Securing funds for use after retirement was considered important, with housing stability being a key concern. This is because the longer one delays, the heavier the burden of home ownership becomes. The achievement score was also higher at an average of 59 points, 15 points more than for retirement asset preparation. Fifty-six percent owned homes, 18% lived in jeonse (long-term deposit lease), 13% in monthly rent, and the remaining 13% lived in parental homes or others. The homeownership rate was significantly lower among Seoul residents (50%) compared to those living in the four major metropolitan cities (63%). The higher the income, the higher the homeownership rate. Households in the top (9th?10th decile) earned 80%, middle (5th?8th decile) 60%, and lower (1st?4th decile) 32%. Among homeowners, 81% lived in their own homes. Fourteen percent lived in jeonse (9%) or monthly rent (5%) despite owning homes.

The report explained, "The higher the household income, the higher the utilization rate of loans to purchase homes," and "the lower the income, the higher the proportion of financial support from parents and relatives."

Among those with outstanding housing-related loans, 60% said loan repayment was burdensome. The main cause of this burden was that 7 out of 10 respondents said they could not save as much as needed. Also, one in three (34%) in their 40s had no loans. For those with loans, the average outstanding loan balance was 80 million KRW. Among those with housing-related loan experience, the average loan balance reached 94 million KRW.

53% of 40-somethings "Have Moved or Plan to Move for Children's Education"

Children's education, ranked third in priority, received a score of 63 points, the highest among the four major life tasks. Twenty-seven percent gave it a score of 80 or above, and only 6% rated it below 30, diagnosing it as insufficient. The reason for prioritizing children's education is the hope that "children will not fall behind and live a normal life." Among parents in their 40s, 88% sent their children to private academies, spending an average of 1.07 million KRW monthly, which corresponds to about 20% of household income.

Notably, half (53%) of parents in their 40s said they have moved or plan to move for their children's education, and a similar proportion (49%) are considering overseas study for their children.

Self-development ranked lower for those in their 40s. The most common self-development activity was preparing for certification exams, followed by physical training, studying financial management, and improving special skills. The average monthly expenditure on self-development was about 220,000 KRW. Forty-eight percent considered starting a business, but only 7% had concrete plans. Regarding startup capital, 58% thought it would be "less than 100 million KRW."

The center emphasized the need for self-diagnosis to check whether one is excessively focused on one of the four major life tasks or, conversely, continuously postponing them. Although those in their 40s see preparing retirement assets as important, in reality, it is difficult to practice as expected due to other tasks taking precedence. Wonju Lee, head of Hana Bank's Pension Trust Group, stated, "Since people in their 40s still have time in their economic activity period, they still have sufficient capacity to prepare retirement assets," adding, "Providing competitive long-term asset management tools such as retirement pensions and Individual Savings Accounts (ISA) to support retirement asset preparation is the way for financial companies to contribute to society."

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