[Ordinary People Report] Because of Family Support... "Even Over 70, I Have to Work"

Photo by Shinhan Bank, Report on the Financial Life of Ordinary People

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[Asia Economy Reporter Song Seung-seop] It has been found that people in their 40s tend to neglect their own retirement preparations in order to support both their parents and children. The number of middle-aged and older adults who try to make up for insufficient retirement funds by working even after retirement has also increased.

According to the "Ordinary People's Financial Life Report" released by Shinhan Bank on the 5th, only 15.3% of people in their 40s answered that they were financially prepared for retirement and old age. Although they identified 41 as the appropriate age to start preparing for retirement and old age, they have not put it into action. The biggest reason for the lack of preparation was economic support for family, accounting for 57.0%. This was higher than that of people in their 30s (35.1%) and 50s (55.3%).

Fixed expenses also increased rapidly in the 40s. As they moved from their 30s to their 40s, the total household income (5.52 million KRW) increased by 1.2 times (1.09 million KRW), but the monthly fixed consumption amount (2.79 million KRW) grew by 1.4 times (790,000 KRW). Most of the increased expenses were used for the family. Among consumption items, education expenses increased the most by 340,000 KRW, surpassing the increase in food expenses (130,000 KRW) and pocket money (70,000 KRW). On the other hand, savings for old age were 270,000 KRW, with a savings rate of 4.9% relative to income. This is not much different from the 4.7% of people in their 30s.

Housing prices also acted as an obstacle to retirement preparation. 29.0% of people in their 40s answered that they intend to purchase real estate within the next three years. Among them, 39.1% said they would take out loans or borrow from acquaintances to cover the purchase costs, indicating that debt burdens are expected to increase further.

Many people planned to compensate for the lack of retirement funds by working beyond the retirement age. While 57.2% of people in their 40s expected to retire before age 65, 58.4% answered that they would need to continue income-generating activities after age 65. In particular, 33.2% responded that they would work even beyond age 70.

This retirement preparation behavior affected the financial readiness of those aged 50 to 64. Among them, 43.8% answered that their financial preparation was insufficient. Comparing those who answered that they were financially prepared (18.5%) with their total assets, there was a difference of 628.98 million KRW. Additionally, those prepared regularly set aside 39.4% (690,000 KRW) of their savings and investment amount of 1.75 million KRW as retirement funds, whereas those insufficiently prepared only saved 13,000 KRW (6.3%) out of 800,000 KRW.

Those aged 50 to 64 also cited living expenses (78.7%) as the reason for their lack of financial preparation. The next reason was "having to financially support children," which accounted for 45.0%.

Regardless of financial preparation status, everyone agreed that retirement preparation should start at ages 44 to 45.

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