[AK Radio] Sang-geon Lee "Keep Cash Flowing Until You Die"

[Interview] Lee Sang-geon, Head of Mirae Asset Investment and Pension Center
Time to Consider a 'Portfolio Life' Rather Than a Single Career
Redesign Your Asset Management Strategy for the Era of Longevity

Lee Sang-geon, head of the Mirae Asset Investment and Pension Center, emphasized that the key to managing assets for those approaching or already in retirement is "to ensure that cash flow does not dry up until death." He explained that the importance of managing retirement assets is growing even more in South Korea, which has entered a super-aged society.

Lee stated, "South Korea entered a super-aged society last year, with one out of every five people aged 65 or older," and predicted, "For women in their 40s today, living beyond 90 years old will become the norm." Accordingly, he advised that retirement asset management should be aligned with the era of longevity. He also pointed out that Japan, which is ahead of South Korea in aging, already has over 30% of its population aged 65 or older, and South Korea is rapidly following this trend.

As a characteristic of household assets in South Korea, he noted that the proportion of real estate assets reaches 70 to 80%. Lee said, "Since this is an average including wealthy individuals, the concentration of real estate assets in ordinary households is likely even more severe," and pointed out, "Because residential real estate is difficult to liquidate immediately, securing cash flow after retirement is challenging."

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He presented the basic structure of retirement asset planning as the 'three-tier pension' linked to the three economic entities: the state, corporations, and individuals. These are the National Pension, retirement pension, and private pension. He explained that, in addition, five sources of cash flow should be created by including 'self-pension' using personal assets and housing pension. Regarding the National Pension, he emphasized, "Although it is not a perfect system, it is important as a basic source of retirement income because it reflects inflation and is lifelong."

Lee said, "Living solely on pension income may be difficult," and recommended a 'pension-work hybrid lifestyle' that combines pension and income-generating activities. For example, if 2 million KRW per month is needed for living expenses, 1 million KRW can be covered by pension, and the rest earned through work. He introduced research from Boston University's Retirement Research Center, which found that delaying retirement by just two years can halve the probability of retirement bankruptcy.

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In this context, he also introduced the 'portfolio life' concept proposed by British management thinker Charles Handy. This approach involves combining various forms of work after retirement to create identity and income sources. "Retiring from a main job does not mean stopping all economic activities," he said, advising, "You can consider flexible work arrangements such as lecturing a few days a week and doing other work on other days."

He particularly emphasized that the first 10 years after retirement are critical for asset management. He warned that suffering major investment losses or financial fraud during this period makes recovery nearly impossible. Highlighting the risk of financial fraud, he urged special caution, saying, "No matter how wise a person is, anyone can become a victim of financial fraud."

Lee advised, "It is necessary to hold about two years' worth of living expenses in cash or cash-equivalent assets among retirement assets," explaining, "This acts as a 'cushion' to withstand sudden drops in the value of investment assets such as stocks." He cited the example of the 2007-2008 financial crisis when the U.S. S&P index dropped about 60% but recovered within 1 to 2 years, emphasizing the importance of cash assets to endure market downturns.

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He also warned, "You must pay off all debts before retirement," adding, "Using severance pay to repay debts will make life after retirement very difficult." He explained that many retirees use their severance pay to repay debts, which is equivalent to losing the largest portion of their retirement funds.

Finally, Lee said, "There is no one right answer to retirement," but stressed, "The key to the retirement game is to avoid the worst-case scenario rather than to pursue the best." While the post-retirement lifestyle may vary depending on individual values and circumstances, he emphasized that basic asset management principles must be followed. "Some may prefer urban living, others rural life," he added, "It is important to consider personal preferences but find a financially sustainable approach."

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