Korea, the fastest-aging society in the world
Life expectancy of 100 years old
Life expectancy has increased so dramatically with improvement of medical technologies and living environment. Accordingly, human life expectancy is forecast to increase approximately 3 months every year. In particular, Korean’s life expectancy has increased by 20 years for 45 years, from 62.3 years in 1970 to 82.4 years in 2016, reaching advanced countries status. Current life expectancy at birth in Korea is 79.6 years and it is expected to reach 95 years in 2100. Considering the female life expectancy is statistically 6 years older than the male life expectancy, Korean women will expect to live 100 years in 2100.
Changes of life expectancy at birth of Korea Source: Statistics Korea(as of Dec. 2016) Estimation for future population
한국인의 기대수명 추이
| Years |
2015 |
2020 |
2025 |
2030 |
2035 |
2040 |
2050 |
2060 |
2065 |
| Average |
82.1 |
83.2 |
84.3 |
85.2 |
86.1 |
86.9 |
88.3 |
89.5 |
90.0 |
| Male |
79.0 |
80.3 |
81.6 |
82.7 |
83.7 |
84.7 |
86.3 |
87.8 |
88.4 |
| Female |
85.2 |
86.2 |
87.0 |
87.8 |
88.5 |
89.1 |
90.2 |
91.2 |
91.6 |
Changes in the Social and Financial Environment
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- Changes of Labor Market
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In the aftermath of the IMF economic crisis of December 1997, it became difficult for Koreans to remain at one job for 20 or 30 years due to frequent restructuring.
As the number of permanent jobs providing high wages and stability shrank sharply, and as non-regular workers including contractor positions and temporary positions replace them, the employment market has been radically altered.
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- Low interest rate
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Following the IMF bailout, not only the employment market but also the financial market faced paradigm shifts.
Market interest rates, which had exceeded 12% per annum until 1998, plunged to 6% in 1999 and have stood at the 2% or 3% level since 2002.
The low interest rates delivered a heavy blow to people who were living on the interest.
Accordingly, it is getting increasingly difficult to save money for one’s old age through savings based on such a low interest rate.
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- Stagnant real estate market
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In the past, investment in real estate played a role as solution for one’s post-retirement living. Since real estate prices steadily increased, living expenses for one’s later years could be prepared by selling real estate or earning rental income. Under such conditions, Korea’s household asset structure leaned on real estate too heavily. As of February, 2011, the ratio of real estate to financial assets in the average household asset structure is approx. 76 to 21. It is so heavily weighted that we say ‘assets = real estate (housing)’.
However, putting one’s trust only in real estate is not the best way to prepare for retirement in that if the population of those in their 30s and 40s decreases, it is highly likely that housing prices will turn downward even amid long-term stability, and that even if housing prices do not fall, they would not be likely to maintain the high growth rates of the past.