A survey found that the appropriate post-retirement pension for a two-person household totals 3.49 million won a month, but the amount people actually expect to receive is only 2.21 million won. Eight out of 10 respondents said their preparations for old age are insufficient.
According to the results of a regular pension survey by KCGI Asset Management of 3,364 users of its website, 78% of respondents said their preparations for old age are insufficient. That is up 10 percentage points from a year earlier.
By occupation, more than 70% said retirement preparations were lacking among the self-employed (80%), office workers (79%) and homemakers (78%). By income, the lower the annual income, the more likely respondents were to say they were unprepared for retirement: 90% of those earning less than 30 million won a year said they were underprepared, compared with 69% of those earning less than 100 million won and 51% of those earning less than 150 million won.
The gap between the appropriate pension amount and the actual expected amount reached an average of 1.28 million won a month. By job, public officials and teachers perceived the appropriate pension level relatively higher, reflecting expectations for public pension benefits. The difference between pre- and post-retirement perceptions was also notable. The appropriate monthly pension amount expected by respondents before retirement was 3.48 million won, but among respondents after retirement it was 4.05 million won, 570,000 won higher
Rising prices reducing real income and the burden of children's education costs were cited as the biggest obstacles to preparing for old age. As reasons for insufficient preparation, "because my income is low" was the most common at 27%, followed by "because of the burden of children's education costs" (20%) and "because I don't know well how to prepare for old age" (18%).
The most preferred retirement timing was around age 60. As for retirement from the main workplace, "around 60" accounted for 39% and "around 65" for 26%, with more than 65% of respondents hoping to retire between 60 and 65. Despite longer average life expectancy and the government's trend toward extending the retirement age to 65, this shows that, voluntarily or involuntarily, people expect to retire at a relatively early age, KCGI explained.
In preferences for products to prepare for old age, 67% said they hold pension savings funds, far ahead of pension savings insurance at 32%. This is interpreted as reflecting an active tendency to seek higher returns over the long term and to manage one's assets directly.
As for why they prefer pension savings funds among pension accounts, "because the expected rate of return is high for long-term investment" was the highest at 50%, followed by "tax credit benefits at year-end settlement" (42%), "low tax rate when receiving a pension" (23%) and "tax deferral effect" (20%).
For pension savings fund investment targets, overseas equity funds centered on the United States were most preferred at 64%, followed by domestic equity funds at 45% and asset allocation funds such as target date funds (TDFs) at 21%. Preference for bond funds was 11%.
An official at KCGI Asset Management said, "To make up for insufficient retirement funds, people are choosing more aggressive management strategies even in pension accounts," adding, "However, since efforts to boost returns entail risk, it seems necessary to increase personal pension contributions and, with expert help, manage portfolios to enhance long-term returns."