Why more Koreans aren’t retiring on time

With pension delays and labor gaps, employers are rehiring seniors—and many are glad to stay

At 61, Baek still reports for work at a small shipbuilding subcontractor in South Jeolla Province—well beyond South Korea’s official retirement age of 60. Officially, he retired last year. But with few younger workers available to take his place, the company rehired him on a contract basis.

“Some of my friends quit as soon as they hit 60,” Baek said. “But I told my company early on I’d stay longer. My pension won’t start for a few more years, and I’m still healthy. I plan to work until 65.”

With another contract renewal planned for this fall, Baek is likely to remain employed through at least 2026.

He is far from alone. According to data released on May 27 by Statistics Korea, a record 770,000 workers left their primary, full-time jobs between the ages of 60 and 64 in 2024—after surpassing the official retirement threshold. That figure is up 5.2% from the previous year and more than double the 362,000 reported in 2016, when the legal retirement age was extended from 55 to 60.

Elderly job seekers look at a hiring information board during a senior job fair at Hwaseong Haenggung Square in Paldal District, Suwon, on March 28, 2025./Yonhap

The data excludes those who held part-time or irregular jobs before retirement. Instead, it captures workers who remained in full-time positions well into their 60s—many of whom continued working under rehiring schemes or in firms where the retirement age had already been informally pushed beyond 60.

Behind the trend is a convergence of demographic and economic forces: South Korea’s aging population, a delayed pension eligibility age, and a persistent labor shortage in sectors such as shipbuilding and construction.

Until last year, Koreans born in 1964 could begin drawing public pensions at age 63. But for those born in 1969 or later, that age rises to 65—creating what some economists refer to as a five-year ‘income gap’ that many seek to bridge by staying in the workforce longer. The labor force participation rate for Koreans aged 60–64 stood at 65.8% in 2024, up from 54.3% two decades ago.

Manufacturing firms, especially small- and mid-sized businesses, are helping to fill the gap by keeping older, skilled workers on the payroll. In industries that rely on experience—such as shipbuilding—companies increasingly prefer to rehire seasoned employees rather than train younger, less experienced recruits.

Participants visit recruitment booths at a corporate taxi driver job fair, held as part of the “Busan 50+ Job Expo” at Dasom Hall in Busan Citizens Park, Busanjin District, Busan, on Oct. 17, 2024./Kim Dong-hwan

As South Korea prepares for a presidential election, debate is resurfacing over whether to formally raise the legal retirement age. Some economists argue that encouraging firms to rehire seniors—rather than mandating a longer working life—could help smooth the transition while minimizing disruptions to youth employment.

“Large corporations are likely to respond to a higher retirement age by reducing new hires or accelerating automation,” said Lee Chul-hee, an economics professor at Seoul National University. “But smaller firms facing labor shortages need older workers now.”

Japan, which entered an ultra-aging society 17 years ahead of Korea, offers a cautionary example. Though its official retirement age has remained at 60 since 1994, Japan enacted the Act on Stabilization of Employment of Elderly Persons in 2013, requiring firms to either raise or abolish retirement age or rehire older workers. Most opted for the latter. But wage compression remains a point of contention—rehired workers in large Japanese companies earn only 70% of their pre-retirement salaries, according to a report from the Korea Labor Institute.

In Korea, a significant portion of older workers end up in low-wage, low-skill jobs. A report released on May 27 by the National Assembly Budget Office found that while Korea had the highest employment rate among OECD countries for those over 65—at 37.3% in 2023—over a third of those workers were in elementary manual labor roles, and 15% worked in machine operation.

For many, continued employment in their 60s means working physically demanding jobs at small firms, often on irregular contracts.