Retirees in their 50s and older spend more than their low income

A senior citizen fills out a job application form at the \'2023 Mapo-gu Senior Citizens Job Fair\' at Mapo-gu Office in Seoul on Wednesday. Yonhap News Agency

As the average annual income of retirees in their 50s and older is less than half that of those who are still working, it has been suggested that the government should make up for insufficient retirement income with personal pensions.

According to the 2023 Retirement Market Report released by the Korea Insurance Development Institute on December 13, the average annual income of retirees in their 50s and older was 31.05 million won, which is 45 percent of that of non-retirees in the same age group (69.61 million won).

The income of retirees decreases, but they still spend lots of money after retirement. In a survey conducted by the KIDI, respondents answered that they would spend some 77.49 million won on their children's education and around 144 million won on their children's marriage after retirement. However, the average retirement benefits they would receive were some 166.99 million won, which was not enough to cover their spending.

The number one retirement plan for people in their 40s and 50s was the national pension (69 percent), but the current income replacement rate, which refers to the monthly pension payment relative to the average monthly income, of the national pension is only 40 percent for 40 years of joining the pension plan. Considering the actual enrollment period, the income replacement rate could be even lower.

The KIDI said, "As of 2022, the income replacement rate for national pensioners is estimated to be 22 percent, which means the public pension alone is not enough to prepare for retirement,” and added that, “Retirees need to secure various sources of retirement income, including pension savings and savings insurance, to live in comfort after retirement.”

"Retirement preparers would like to see a higher tax deduction rate (13.2%) and a higher tax deduction limit (6 million won) for the current pension savings insurance," the Insurance Development Institute said, suggesting that tax benefits should be increased to encourage retirement and later life preparation.

The KIDI also suggested that tax benefits should be increased to encourage more people to better prepare for retirement, saying, "People who are preparing for retirement hope that the tax credit rate (13.2 percent) and the tax credit limit (6 million won) of the current pension savings insurance to be higher."

※This article has undergone review by a professional translator after being translated by an AI translation tool.