It should not come as a surprise that many of the baby boomers, those born from 1955 to 1963, will face extreme financial difficulties when they go into retirement. They have not saved enough for retirement, into which they will start going in a couple of years. But not many realize what is in store for them.
The number of baby boomers stands at 7 million, or 14 percent of the total population. Most of the baby boomers, though born in rural areas, now reside in urban areas. “Nine to five” and a “five-day workweek” still sound unfamiliar to them. An average male baby boomer works nine hours a day and six days in a week.
Many regard themselves as middle class. They are optimistic about their future. But their confidence is not based on firm ground. On the contrary, their post-retirement lives have bleak prospects. Their prospective plights are well documented in a recent report jointly produced by a Seoul National University research institute and an insurance company.
According to the report, an average baby boomer couple saves a meager 170,000 won on a monthly income of 3,860,000 won. The only other asset of any value the man and wife hold in their possession is the home they live in. Yet they believe they would need a minimum of 2,110,000 won a month for their post-retirement life.
These dismal prospects are juxtaposed with the lengthening life expectancy. Its average is 80.5 years ― 77 years for males and 83.8 years for females.
Life for baby boomers will not be the same as it is for their parents. The reason is that the relationship among family members and their lifestyle have been undergoing a drastic change as a consequence of urbanization.
As their parents did for them, baby boomers pay for their children’s education, from kindergarten to university, and foot the bills for their weddings and home rental. Many of them provide financial support for their parents, be they residing in the same house with them or separately.
Yet not many expect any support for their own life in old age from their children. Those who do account for 11 percent of the 1,000 polled by a research institute funded by the Seoul metropolitan government.
For many of them, the only source of steady income will be the national pension program. Pension benefits, however, will not be much more than half the minimum amount of money they believe they will need. Worse still, they will have to wait for several years after retirement until they draw pension benefits. They will be entitled to them when they turn 61 or 62.
What the baby boomers need to do to better prepare for retirement is to spend less and save more. But they can hardly afford to do so. The only viable alternative is to work beyond retirement.
The nation has no set retirement age. The only exception is that for government employees, many of them guaranteed to work until 60 or longer. According to a report from Statistics Korea, the average retirement age for corporate employees is 57. But many leave work before they reach that age.
Ideas about extending the retirement age are galore. Among them are subsidizing corporations putting senior citizens on their payrolls and retaining workers beyond retirement at reduced pay. A less plausible idea is making retirement at 60 legally binding. The proposal, which came from the Federation of Korean Trade Unions, cannot be implemented in a capitalist society.
One of the most constructive ideas is for the government to provide subsidies, tax favors or both for small- and medium-size business enterprises that are hiring skilled employees retiring from large corporations. Such an initiative will help facilitate the transfer of managerial and technical know-how as well.