The Fastest Asset Accumulation by 'X Generation', Slowest by 'Y Generation'... Capital Area 1.5 Times Faster Than Non-Capital Area

Seoul Institute Publishes 'Data Insight Report' Analyzing Intergenerational Asset Gap
Household Head Assets Peak at Ages 55-59, Decline After 60
Analysis of Assets of Industrialization Generation, 1st and 2nd Baby Boomers, X and Y Generations Using Household Financial Welfare Data

Time Series Changes in Assets by Generation

[Asia Economy Reporter Lim Cheol-young] Average assets by life cycle steadily increase with age, peaking between ages 55 and 59, and then decline after the retirement age of 60. However, the speed of asset accumulation in the Seoul metropolitan area was more than 1.5 times faster than in non-metropolitan areas, and the asset growth rate of the 'Y Generation' born between 1985 and 1996 was slower compared to previous generations.

On the 2nd, the Seoul Institute released the 'Data Insight Report No. 5' focusing on 'Intergenerational Asset Gaps,' based on household financial welfare data (2012?2020) from Statistics Korea.

The institute analyzed asset gaps between generations by dividing household heads into five generations based on age: Industrialization Generation, 1st Baby Boomer, 2nd Baby Boomer, X Generation, and Y Generation. Additionally, they conducted a multidimensional analysis considering various aspects that constitute assets, such as changes in asset accumulation over the life cycle, inflation rate, debt, financial asset investment methods, and consumption patterns, while also addressing asset differences between the Seoul metropolitan area and non-metropolitan regions.

The survey results showed that household heads' assets increased along with income as they aged, reaching a peak before declining after retirement. Based on data from 2012 to 2020, household heads living in the Seoul metropolitan area saw their assets rise approximately 15 times, from 41.37 million KRW to 593.82 million KRW, whereas those in non-metropolitan areas experienced about a 10-fold increase, from 36.91 million KRW to 387.33 million KRW.

Asset gaps between generations were larger in the Seoul metropolitan area than in non-metropolitan areas. From 2012 to 2020, the 2nd Baby Boomer and X Generation narrowed their asset gaps with preceding generations, but the Y Generation did not significantly close the gap with earlier generations. Over the past nine years, the X Generation increased assets the fastest among all generations, catching up with previous generations. Furthermore, the Industrialization Generation in the Seoul metropolitan area, who were the main economic actors in the 1960s and 1970s, still held relatively substantial assets.

Time Series Changes in Net Assets and Liabilities by Generation and Investment Preferences

Meanwhile, over the past nine years, the net assets of the X and Y Generations steadily increased alongside their debts. This is interpreted as these generations leveraging loans and other means to grow their assets. Notably, the X Generation was both the fastest asset accumulator and the generation with the largest increase in debt during this period.

Key considerations and management methods for financial asset investments varied by generation. Younger generations, including the X Generation, showed a stronger preference for direct investment compared to other generations. The Industrialization Generation preferred safety and deposits, the 1st Baby Boomer favored personal pensions, and the 2nd Baby Boomer used a balanced mix of direct and indirect investment methods excluding deposits. The X and Y Generations primarily considered profitability, favoring direct investments and using deposits less frequently.

Comparing net assets by birth cohort within the same age group, those born in the 1970s surpassed the preceding 1960s cohort by the largest margin (40.75 million KRW). The 1990s cohort showed increasing net asset gaps with the 1980s cohort as they aged, with differences of 13.51 million KRW at ages 20?24 and 25.8 million KRW at ages 25?29.

Yoo Ki-young, Acting Director of the Seoul Institute, explained, "The analysis indicates the need to provide asset management education programs for the Y Generation, who pursue profitability. It also shows that policy proposals for a new 'second act' in life are necessary for the Industrialization Generation and 1st Baby Boomer generation, whose retirement plans are not adequately prepared."

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