[Golden Age 22] Choi Kyung-jin, Research Fellow at Housing Finance Research Institute, "Housing Pension: A Retirement Plan That Secures Both Housing Stability and Income at Once"

Korea Reaches Ultra-Aged Society in 7 Years
Faster Aging Speed than Developed Countries
Elderly Poverty Rate 43.4%...Urgent Need for Retirement Preparation
Housing Pension, Residential Stability + Income

Choi Kyung-jin, Research Fellow at the Housing Finance Research Institute of Korea Housing Finance Corporation, is giving a lecture on the topic of "Retirement Pension Flow Using Housing Pension" at the 2022 Asia Economy Golden Age Forum held at the Bankers' Hall in Jung-gu, Seoul on the 20th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Hwang Yoon-joo] Housing pension has been advised as the best alternative to secure housing stability and income (cash flow) in the aging era.

Choi Kyung-jin, a research fellow of the Fund Research Team at the Korea Housing Finance Institute, stated on the morning of the 20th at the '2022 Asia Economy Gold Age Forum' held at the Bankers Hall in Myeong-dong, Seoul, hosted by Asia Economy, through 'Cash Flow in Old Age Using Housing Pension,' that "the 'housing pension,' which allows elderly people to live stably for life in their residence without the burden of interest and principal repayment, is the most suitable system for the characteristics of the elderly."

The housing pension is a system where middle-aged and elderly people aged 55 or older who own a house pledge their home as collateral and live in their own home for life while receiving a pension (monthly payment) guaranteed by the government for a certain period or for life.

If at least one spouse is aged 55 or older, they can join, and it is available if the individual or spouse is a Korean citizen (including overseas Koreans, excluding foreign nationals of Korean descent).

However, it is only available if the house price is 900 million KRW or less based on the official price (market price 1.2 to 1.3 billion KRW). Only houses under the Housing Act (apartments, row houses, multi-family houses, multiplex houses), senior welfare housing, officetels for residential purposes, and mixed-use houses with more than half of the area used for housing are allowed. Actual residence is a principle, and there must be no provisional seizure or mortgage rights.

Research fellow Choi pointed out the characteristics of the elderly in Korea as household assets. Since the proportion of real assets (real estate) is large compared to financial assets, the housing pension is suitable for old-age preparation.

Looking at the proportion of real estate in total assets, it was 76.2% for those in their 50s and 82.2% for those aged 60 and above. In contrast, financial assets were at 17.6% and 17.8%, respectively. Those in their 30s and 40s showed similar trends. The proportion of real estate was 68.1% and 76.0%, significantly higher than financial assets (31.9%, 24.0%).

Choi said, "If real estate prices fall, the value of held assets decreases, causing insecurity in old age, and if real estate prices rise, there is a possibility of losing eligibility for basic pension benefits and increased tax burdens such as property tax and health insurance premiums," adding, "The risk is high regardless of real estate prices."

He emphasized, "A characteristic is the high proportion of residence in owned real estate, and to hedge risks, real assets (real estate) should be liquidated to create cash flow in old age and convert it into income."

Research fellow Choi pointed out Korea's elderly poverty rate and stated that the housing pension can also alleviate elderly poverty.

He said, "Compared to advanced countries such as Japan (12 years) and the United States (15 years), Korea's time to reach super-aged society is very short at 7 years," and pointed out, "The most serious problem in Korea's aging issue is the elderly poverty rate."

Choi said, "As of 2021, compared to the G5 advanced countries, the elderly poverty rate is 43.4%, ranking first," and added, "The reason for the high elderly poverty rate is that the income of the elderly is poor."

According to the 2021 Household Financial Welfare Survey, 38.8% of retired households answered that "living expenses are insufficient." 16.8% responded "very insufficient." Among non-retired households, 39.4% answered "not well prepared for old age," and 14.8% answered "not prepared at all."

Choi proposed the housing pension as an alternative. He evaluated, "It is possible to live stably for life in the residence," and "It can secure both housing stability and income."

He added, "When converting housing assets into monthly payments of the housing pension and measuring the relative poverty rate of elderly people aged 65 and older, the three-year average decreased by about 11 percentage points, showing an effect of alleviating elderly poverty."

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