Lee Jin-seop (75), a retired civil servant living in Namyangju, Gyeonggi Province, saw gains last year as the 100 million won worth of Samsung Electronics, SK hynix, and Korea Electric Power Corporation shares he had bought and held six years ago rose sharply. Thinking this uptrend could continue, he took out a margin loan from a securities firm early this year and bought additional stocks. But after the Middle East crisis, the market fell, and he has been losing sleep at night. If prices keep dropping and his positions are forcibly liquidated through a margin call, it would eat into his retirement funds.
With the Middle East crisis widening market volatility, there are growing concerns that so-called investing with borrowed money will lead to asset losses and shock the real economy. The Korea Composite Stock Price Index (KOSPI) rose 160% from Jan. 2 last year to Feb. 27 this year, then fell 14% through the 3rd after the Middle East crisis.
Amid this, the balance of borrowed-money investments among those in their 60s and older stood at 7.7 trillion won at the end of February, more than double the 3.5 trillion won among those in their 20s and 30s. People in their 60s and older have more assets than younger people, so they can be seen as having the financial capacity to withstand short-term shocks from a market decline. But many are retired, and a significant portion of their assets is tied up in real estate. As a result, if a market downturn persists, there are concerns they may fail to recoup losses and even see their retirement funds hit.
◇ Borrowed-money investing among 60-plus at 7.7 trillion won... more than double those in their 20s–30s
According to materials received by People Power Party lawmaker Yoon Han-hong, chair of the National Policy Committee, from the Financial Supervisory Service on the 4th, the margin loan balance at the 10 major domestic securities firms (Mirae Asset, Korea, NH, Samsung, KB, Kiwoom, Shinhan, Meritz, Hana, Daishin) was about 27 trillion won at the end of February, up 17% (3.82 trillion won) from the end of last year. A margin loan balance refers to the amount investors borrowed from securities firms for stock investing and have yet to repay.
Among those in their 60s and older, the margin loan balance rose 17% (1.11 trillion won) to 7.71 trillion won. For those in their 20s and 30s, it increased 17% (520 billion won) to 3.52 trillion won. In other words, the borrowed-money amount among those 60 and older is more than double that of people in their 20s and 30s. The share of those 60 and older in the total balance is about 29%, the second highest after those in their 40s and 50s (15.63 trillion won, 58%).
Over last year, borrowed-money investing among those 60 and older grew at the fastest pace of any age group. It rose 85% from 3.6 trillion won at the end of January last year to 6.6 trillion won at the end of December. Over the same period, the growth rate for those in their 40s and 50s was 52%, and for those in their 20s and 30s it was 46%.
◇ Those in their 60s have financial capacity, but... risk of retirement fund losses
As the market plunged on the Middle East crisis, worries grew that borrowing to invest would lead to forced liquidation. A forced liquidation refers to a securities firm selling an investor's shares at a fire-sale price when the investor has borrowed money using shares as collateral and falling stock prices push the collateral value below a certain level. In this case, the investor suffers large losses, and there could be negative spillovers to the real economy, such as weaker domestic demand.
According to the Ministry of Data and Statistics (MODS) 2025 Household Finance and Welfare Survey, the average asset value of households headed by someone 60 or older was 600 million won as of March last year, higher than the overall household average of 566.78 million won. It is also higher than the 314.98 million won among those in their 20s and 30s. The average liability for households headed by someone 60 or older was 65.04 million won, lower than overall households (95.34 million won) and those in their 20s and 30s (95.48 million won). In the short term, they can be said to have relatively more capacity than younger cohorts to withstand market shocks.
The problem is if the Middle East crisis drags on and the market downturn is prolonged. Starting in their 60s, people enter retirement age, so their asset growth rate is 3.2%, lower than the overall household average of 4.9%. Those in their 20s and 30s are just starting their careers and can grow their income, but those 60 and older are less likely to do so. Also, among those 60 and older, real estate accounts for 77% of assets, higher than the 71% for overall households, leaving them relatively short of cash.
A senior government official said, "We are monitoring because the margin loan balance among those 60 and older has increased rapidly in recent months." The official added, "While the balance itself is manageable when compared with market capitalization, if middle-income households, not high earners, have borrowed excessively relative to their assets to invest in stocks, their retirement income could collapse."