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Editor's NoteIn a world where marriage is not mandatory, encountering those who choose to remain single is no longer a strange experience. Who chooses to remain single, and why? The issue is not only the societal prejudice surrounding singlehood. There is also a vague admiration directed at it. We examine the pros and cons of the so-called 'single life.'

'Poverty, illness, loneliness, idleness.' These are the four hardships of old age. For singles, the possibility of facing a miserable end amid these four hardships is even greater than for married people. This is because they have no spouse to lean on or children to reach out to in difficult times, making them like a 'cow with no hill to lean on.'

Mr. Kim I-jun (anonymous), 50 years old and living alone, is naturally worried about his old age. When he was young, he had no worries because he had no children to support, but now that he is old, he feels helpless without family to support him.

Mr. Kim expressed his concerns, saying, "I have been paying into the National Pension while working, but I wonder if it will be enough. As I get older, I will have to pay more for hospital bills than now, and there will come a time to retire from work. I wonder how I will manage."

The anxiety about old age is the same for young singles. Those who choose singlehood as their lifestyle inevitably bear the burden of 'paying the price for their choice.'

Lee Young-joo, CEO of the Pension Doctor Counseling Center and operator of the YouTube channel 'Pension Doctor,' emphasizes that singles especially need to prepare diligently for old age from a young age. She said, "According to the National Pension Research Institute, the minimum living cost for a single person in old age is about 1.24 million KRW, but that is literally the minimum living cost. Even by current standards, about 1.8 to 2 million KRW per month is needed for a smooth old age."

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So how should one prepare from now on? If you are an office worker, you need to first abandon the belief that the National Pension, which everyone is enrolled in, will take care of your old age. There are many variables in relying solely on the National Pension. You might quit your job, and you cannot guarantee you will work until retirement age.

The National Pension is merely a minimum safety net and does not guarantee a prosperous old age. According to the National Pension Service, as of February 2023, the average monthly National Pension payment per person is 560,000 KRW.

A bigger problem is that the 'cost-effectiveness' of the National Pension is declining. Lee said, "Basically, pension contributions start mandatorily when you begin working, but people in their 20s and 30s will not receive more than the current amount."

She advised that it is time to prepare for private pensions. She said, "There are situations where the returns on private pensions exceed those of public pensions. Therefore, those in their 20s and 30s preparing for pensions now need to focus more on private pensions than public pensions."

The reason private pensions are more attractive to singles is their versatility. Lee explained, "With the public National Pension, you can only designate certain survivors, but with private pensions, there is greater flexibility. Even if I cannot receive it, I can leave the remaining balance to someone I want to give it to." She recommended investing about 20% of income into pensions.

Private pensions are broadly divided into tax-qualified and non-qualified types. Tax-qualified pensions receive tax benefits upon contribution, with pension savings and Individual Retirement Pensions (IRP) being representative pension accounts. Pension funds also fall under pension savings. The second type, tax non-qualified, does not offer tax credits on annual contributions but can provide tax-exempt benefits upon receiving the pension under certain conditions. Pension insurance purchased from life insurance companies is a typical example.

Lee emphasized the importance of creating a portfolio considering both profitability and tax benefits.

She said, "If you have income and need some tax refunds at year-end, it is good to use pension accounts. Through pension accounts, you can contribute up to 18 million KRW annually combining pension savings and IRP, and IRP offers tax benefits up to 9 million KRW. I am not saying you must contribute 9 million KRW, but even contributing 1 million KRW allows you to get a tax refund corresponding to that amount, so you should utilize this."

She added, "If I invest 500,000 KRW per month in pensions, I can allocate 250,000 KRW to pension funds and 250,000 KRW to pension insurance, creating a portfolio. This way, you can enjoy the benefits of each."

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Although there is a risk of principal loss, there are ways to generate returns beyond tax benefits. However, it is important to remember that pension investment is not a sprint but a marathon. She said, "Buying currently popular ETFs for short-term trading is not appropriate for pension products. Following ETFs like electric vehicle ETFs or hydrogen car ETFs can yield profits for one or two years, but you cannot do that for 20 or 30 years."

Her recommendation of Samsung Electronics is for this reason. Buying stable blue-chip stocks allows for long-term holding. She emphasized, "Young people make the mistake of trying pension fund investments for just a few months and getting exhausted by stock price fluctuations. In the U.S., people investing in pension funds do not trade ETFs or stocks. They join regular funds and use a buy-and-hold strategy for 40 years."

It is also necessary to distinguish between lump sums and pensions. According to Lee's pension investment philosophy, pensions are 'money that protects me,' while real estate and lump sums are 'money I must protect.' She pointed out, "Managing lump sums involves costs. While it may seem easy to manage when young, as you age, judgment becomes clouded and control becomes difficult. For singles who cannot have someone manage or advise them, management risks increase."

She continued, "However, pensions provide a fixed amount for life without needing my attention, reducing worries."

As the number of social members with diverse family forms increases, there are calls to adjust the public pension system accordingly. Singles, in particular, are likely to miss out on family benefits from public pensions and are in a blind spot of public pension coverage.

Lee said, "The current pension structure is centered on married people. Singles without children or surviving parents cannot receive benefits. It is time for institutional improvements by the state."

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