Many older citizens facing financial struggles, with 4 out of 10 seniors in poverty

Senior citizens attend a job fair for the elderly held in Busan on Monday. (Yonhap)
Senior citizens attend a job fair for the elderly held in Busan on Monday. (Yonhap)

The number of South Koreans who choose the early payout option for the old-age pension has surpassed the 1 million mark for the first time, government data showed Tuesday.

According to the National Pension Service, the recipients of the early old-age pension system passed 1 million in July this year, with the number continuing to climb to 663,509 men and 342,403 women in the following month.

Those subscribed to the national pension program for at least 10 years are entitled to receive old-age pensions though the age at which they can claim varies by year of birth. Those born in 1969 or later have to wait until they are 65, but payments start younger for people born before that: Those born in 1961-1964 can claim from the age of 63.

It is different from the basic pension, payment for which is available to those aged at least 65 and whose income is in the bottom 70 percent of the population.

But subscribers can choose to begin receiving the national pension up to five years earlier, but with 6 percent taken off the benefits for each year it is moved forward. For example, if a person begins receiving the pension two years early, they will receive 12 percent less per month than they would have if they had begun drawing their pension at the regular age.

The data shows a sharp increase in applications for the early payment system since 2023, when the number of applicants in the first half of the year (63,855) surpassed the figure for the entire 2022 (59,314).

One reason for the jump that year is that the pension payment age rose. People born in 1960 could receive regular payments from 2022, but those born in 1961 would have to wait until 2024.

But another possible factor is the revised standards for exemption from health insurance payments. In order to be legally recognized as a dependent under the state health insurance program, people must to have an annual income of 20 million won ($13,600) or less. There is also a maximum asset threshold — which varies depending on the level of income and one's relation to the subscriber.

The annual income threshold was lowered from 34 million won in September 2022, increasing the number of people who would benefit by reducing their regular income slightly by claiming early.

(123rf)
(123rf)

More senior citizens face economic hardship

The trend coincides with broader signs of financial distress among older Koreans.

Government data shows that 38.2 percent of Koreans aged 65 and older were in relative poverty in 2023, defined as having disposable income at or below 50 percent of the national median.

Korea’s senior poverty rate remains the highest among the 38 members of the Organization for Economic Cooperation and Development. In 2020, 40.4 percent of Koreans aged 66 and above were in relative poverty — nearly triple the OECD average of 14.2 percent.

Against this backdrop, Korea is debating whether to gradually raise the basic pension eligibility age from 65 to 70, a proposal driven by rapid aging and concerns over long-term pension fund depletion as the nation enters “super-aged society” status.

But research warns that delaying benefits could severely destabilize low-income seniors.

A study by Kim Seong-wook, a sociology professor at Hoseo University, found that raising the basic pension age by one year could increase economic insecurity among seniors by 16.9 percent, rising to 52.6 percent with a two-year delay and 60.4 percent with a three-year delay — with the harshest impact on households in the bottom 20 percent income bracket.

“Raising the eligibility age isn’t just a matter of fiscal efficiency,” Kim said. “It is a fundamental restructuring of how seniors sustain their livelihoods. Any such change must be accompanied by concrete measures to address economic insecurity and widening inequality among older households.”


minsikyoon@heraldcorp.com