[Financial Planning for the 100-Year Life] 120,000 Hours After Retirement

According to data surveyed and published in 2021 by the employment consulting company JobKorea, the average perceived retirement age among Korean workers aged 40 and above is 51.7 years. Even public enterprises, often called "the workplace of the gods," have an average retirement age of 53.8 years, possibly due to early retirement programs. Mid-sized and small businesses have an average retirement age of 51.7 years, while large corporations have an average of 49.5 years.

Let's assume retirement occurs at the rounded average age of 52. Also, assume an average life expectancy of 83 years (based on 2021 data). This means post-retirement life spans 31 years. Even after subtracting time spent sleeping and eating, about 11 hours remain per day. Multiplying 11 hours by 365 days and 31 years results in 124,465 hours. The average annual working hours for Korean employees is 1,915 hours (2021 data). Dividing 124,465 hours by 1,915 hours gives approximately 65 years. This implies that the 31 years after retirement feel like 65 years of working life in terms of available time.

However, when planning for old age, it is inappropriate to base calculations solely on average life expectancy. Preparation should be made assuming survival up to the age with a 20% survival probability. According to projections by Professor Park Yoo-sung of Korea University, for those born in 1980, the age with a 20% survival probability slightly exceeds 100 years (as of 2020).

Using the previous method, the 48 years from retirement at 52 to age 100 correspond to 101 years of working life. What will one do during this long period? How will living expenses be secured?

Post-retirement living expenses can be divided into two categories: insufficient and sufficient. According to the Household Finance and Welfare Survey by Statistics Korea, most average Korean households face a shortage of living expenses in old age. This is because while life expectancy has increased, retirement age has been pushed earlier.

Looking at different age groups, the period with the highest wealth is around retirement in the 50s. According to the Household Finance and Welfare Survey, the total household assets for households in their 50s amount to 642 million KRW. After subtracting average debts of 108 million KRW, net assets stand at 534 million KRW. The problem is that 495 million KRW of these net assets are real estate values, mostly the homes they live in. Available net financial assets amount to only 39 million KRW.

Whether considering asset size or pension preparation, the average Korean household is far from sufficient to cover living expenses for 30 to 40 years after retirement. Moreover, it is difficult to expect support from the government, children, or relatives. Therefore, retirees must supplement their living expenses by working and earning labor income in some capacity.

Perhaps because of this, the number of elderly workers has significantly increased recently. According to the National Statistical Portal of Statistics Korea, as of February this year, there are 5.772 million employed persons aged 60 and above, more than 2.1 times the 2.734 million recorded in February 2013. The employment rate for those aged 60 and above was 42.8% as of February this year, up 10 percentage points from February 2013. Considering that the employment rate increased only 0.8 percentage points from 32% in February 2003 to 32.8% in February 2013, it is clear how much the employment rate among the elderly has risen in the past decade.

The problem is that in a reality overflowing with youth unemployment, it is not easy for elderly people to find jobs. Those who actively sought employment before retirement generally found jobs after retirement as well. A strong will to work is the most important factor for successful reemployment. Lowering one's expectations is also crucial, as one must find work that younger generations cannot or will not do.

Having a marketable specialty is also important. One should objectively analyze what they are good at and choose a suitable occupation to conduct efficient job searching. If one lacks a notable specialty, it is advisable to undergo retraining to develop one before hastily looking for a job.

Changhee Kang, Head of Truston Asset Management Pension Forum

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