A couple's appropriate pension amount needed for retirement preparation is estimated to be 3.91 million won per month. However, the combined expected pension amount for the couple is only 2.71 million won, indicating a shortfall of about 1.2 million won.
KCGI Asset Management noted on the 24th that this was the result of a survey conducted with 789 clients. As prices rise and living standards improve, the appropriate pension amount has increased by about 17% compared to the same survey last year.
By occupation, professionals estimated their appropriate monthly pension amount to be 5.25 million won, but the expected pension amount was only 4.09 million won. Civil servants also fell short of their appropriate pension amount (4.35 million won) with an expected amount of 3.36 million won. The gap between the appropriate and expected pension amounts was even larger for office workers and homemakers, at 1.22 million won and 1.53 million won, respectively.
Those with higher incomes were better prepared for retirement. For respondents with an annual income exceeding 150 million won, the expected pension amount was 4.83 million won, three times higher than the expected pension amount of 1.76 million won for those earning less than 30 million won annually.
Sixty-eight percent of survey participants answered that their retirement preparation was insufficient. By occupation, the proportions of those who felt inadequate in their preparations were as follows: 83% for homemakers, 74% for office workers, and 66% for the self-employed.
The most common reason cited for inadequate retirement preparation was 'not knowing how to prepare for retirement,' at 29%. This was followed by 'earning too little' at 27%, 'burden of children’s education expenses' at 22%, and 'due to dwellings' at 18%.
Regarding the management of private pension savings accounts, 92% preferred pension savings funds over pension savings insurance. The primary reason for this preference was that 'expecting higher returns on long-term investments' accounted for 70% of responses.
In managing pension savings accounts, 46% of respondents showed a preference for 'high-risk, high-reward' while another 46% preferred 'medium-risk, medium-reward,' indicating that most respondents prioritized revenue. Those who preferred 'low-risk, low-reward' constituted only 8%. Higher income levels corresponded with a preference for medium-reward or higher, while lower income levels leaned towards low-risk.
When investing in pension savings funds, the most preferred fund type was U.S.-centric overseas stock funds, accounting for 67%. Preference for overseas funds excluding the U.S. was low at 10%. A KCGI Asset Management official said, 'As the U.S. stock market, centered around big tech, expands its global dominance, investor preference also appears to be the highest.'
KCGI Asset Management emphasized the importance of starting early, as a longer pension contribution period allows for compound interest benefits. To receive a pension of 1.2 million won monthly for 25 years, approximately 260 million won is needed, assuming a 3% return on investment. To accumulate this amount, one would need to save 310,000 won per month for 30 years at a 5% annual return, 630,000 won for 20 years, and 1.65 million won for 10 years.
A KCGI Asset Management official noted, 'To increase pension amounts, it is necessary to augment private pension preparations such as pension savings and to shift daily spending into investments.'