[초고령 사회가 온다] 〈1〉 The economic power of the elderly determines national vitality
Developed countries such as Japan and Buddhism are facing a super-aging society… Strong private pension with high-yield public pension
“I’m actually better off than when I was working”… In the U.S.,22% of spending last year was for seniors aged 65 or older.
Enjoy a cruise trip with your pension… Participate in economic activities such as re-employment and starting a business
Malcolm Marchesi (83), who lives in Euckfield, southeastern England, worked as a farmer and retired in 2006. Before retirement,he worked as a farmer,milking cows every day,but after retirement,he enjoys traveling and meeting his family in the Netherlands,Switzerland,and Italy. Mr. Markesh boasted, “When I was working, I was in the low-income class, but now, thanks to the pension, my situation has improved and I am probably in the middle class.”
Mr. Markesh receives a pension of about 2,400 pounds (about 4.25 million won) per month.National pension accounts for 65% of them, personal pension accounts for 17%, and retirement pension accounts for approximately 10%. The remaining 8% is half of the pension that Mr.Markesh’s wife, who passed away, would have received from her employer.
Mr. Markesh said, “I always paid a little extra into the national pension whenever I could afford it. “My wife was the same,” he said. “I also have one or two individual Asset Management Accounts (ISA). “It’s a way to increase profits while avoiding income tax.” The National Superannuation Trust (NEST), managed by the UK Department for Work and Pensions, mandated a default option in 2012. 99% of NEST subscribers subscribe to the default option,and the average annual rate of return is 8-9%.
● Starting a business in your 60s… Elderly consumption supports the economy
In Korea, 2025 is expected to be the first year of a super-aging society, with people over 65 years old accounting for more than 20% of the total. Japan, a long-lived country, took 10 years to move from an aging society (more than 14% of the elderly) to a super-aged society, and France took 39 years, but Korea entered a super-aged society in just 7 years from 2018, when it became an aged society. It was placed before my eyes.In addition, starting next year, 9.54 million ‘second baby boomers’, born in 1965, will sequentially retire over the next 10 years.
The problem is that despite the record-breaking rate of aging,the elderly are poorly prepared for their retirement. This is why concerns are spreading that the entry into a super-aging society could result in a large number of elderly people suffering from an income cliff.
Unlike us,who are suffering from unprepared super-aging,advanced countries are seeing older people actively consume and engage in economic activities based on generous pensions. This is supported not only by the government’s well-managed public pension but also by private pensions, and the re-employment market is also solid.
Thanks to this, the elderly are establishing themselves as the ‘secret weapon’ of advanced economies. According to the U.S. Federal Reserve, Americansaged 70 and older currently own about 26% of total household assets. There are many pension rich people. As of the end of the second quarter (April to June) of this year, Fidelity, the largest retirement pension asset management company in the United States, had 497,000 of its 401K (US retirement pension system) subscribers with a balance of more than $1 million (approximately KRW 1.4 billion) in their accounts.It was said to be the highest ever. Based on these assets, the elderly are opening their wallets without hesitation. According to a consumer spending survey released by the U.S. Department of Labor last year, seniors aged 65 and older accounted for about 22% of total spending. This is the highest figure as 1972, when relevant statistics began to be compiled.
Analysis suggests that the reason the United States was able to boast solid economic growth despite global economic instability such as the high interest rate trend, the prolonged coronavirus pandemic, and the U.S.-China conflict was thanks to consumption by the elderly. The Wall Street Journal (WSJ) said, “The baby boom generation alone has currently accumulated wealth of $77.1 trillion (approximately 10,8109.62 trillion won) and is acting as a buffer against the twin disasters of ‘inflation’ and ‘high interest rates.’” “Because most of them are retired, the spending of the elderly is less affected by unemployment,” the report said.
In France, according to the Committee for Research, Evaluation and Statistics (DREES), it is estimated that there will be about 750,000 retirees receiving a pension of more than 4,000 euros (about 5.9 million won) per month in 2024. These people account for about 4.4% of the total 17 million pensioners.
Jean-Pierre Pontsaint (78), who lives in Paris, France, became the father of two children after retiring at the legal retirement age of 60. When he retired, his daughter from his late remarriage was only one year old, and his son was born the following year. After becoming a ‘late-dad’ in his early 60s, he boldly decided to start a real estate consulting business.
Starting a business in your 60s was not easy. People I knew well from my current job had already retired, making it tough to secure customers. When the real estate market was bad, there were months where the income was 0 euros. There were many times when only fixed costs such as electricity bills were incurred, resulting in losses. Mr.Pongsaeng said, “Still, I was able to try starting a business because I received solid pension insurance money from three sources.” he opened a ‘pension pipeline’ in three places, including the public pension, general retirement pension, and retirement pension for high-ranking executives. Pension income from three sources currently amounts to an average of 6,000 euros (approximately 8.82 million won) per month. Thanks to his ‘triple pension’, he was able to properly educate his two young children.
You can use your pension as a strong foundation to grow your business. Mr. Pontsaeng’s current income has risen to 60% of what it was before retirement. Now his two children have grown up and are about to become self-reliant, but he plans to continue working. Mr. Pongsaeng said, “I enjoy working, so I want to continue working as long as my health allows.”
● “Cruise trip with pension”, rich retired people enjoying leisure time
<img src="https://dimg.donga.com
The reason Mr. Howard is able to take care of his children and grandchildren even after retirement is because Australia’s superannuation pension system and old-age pension provide a solid support for his life. mr. Howard receives retirement and old-age pension of 4,000 Australian dollars (about 3.6 million won) every month. By renting out part of the house, he earns an additional income of about 600 Australian dollars (about 540,000 won) per month.
Superannuation, an Australian retirement pension system with the name ‘Super’ (the best), has been mandatory for employees to sign up since 1992, and recorded an annual rate of return of 8% and last year’s rate of return of 9%. Australian seniors, who can enjoy ample pension assets if left to their own devices, agree that “withdrawing and using retirement pensions early is something only people at the end of their lives would do.” Mr. Howard also said, “When I worked as a teacher, I put 10% of my salary into my retirement pension. Now, I am living a satisfying retirement by gathering with my friends every Monday, singing, and teaching art to residents for an hour and a half.” did it
Mr. Shinomiya, who is currently re-employed as a social lecturer and continues his economic activities, said that although his salary (currently 170,000 yen, approximately 1.59 million won) has decreased by half compared to before retirement, he is satisfied with his retirement. He said, “Compared to when I worked as a full-time homeroom teacher, I have less duty, I don’t have to clash with parents, and I have more holidays. I’m happy as I have more free time and can treat my students with a smile.” Simultaneously occurring, he said, “I am more proud of being called a teacher than anyone’s grandmother or wife. “It’s fun to go out and work, so I continue to work even after retirement,” he said with a smile.
What strategies can countries implement to better support their aging populations economically?
Interview between Time.News Editor and Aging Economic Expert
Time.News Editor: Welcome, and thank you for joining us today! We’re living in an age where the phenomenon of aging societies is influencing economies worldwide. With us is Dr.Evelyn Carter, a leading expert in gerontology and its economic impacts. Dr. Carter, let’s dive right into the pressing issue at hand. Your insights into our current global landscape are invaluable.
Dr. Evelyn Carter: thank you for having me! It’s a pleasure to be here and discuss such an vital topic.
Time.News Editor: We often hear about the challenges of a super-aged society, especially concerning retirement readiness. Yet, research indicates that many seniors, like Mr.Malcolm Marchesi in England, report being better off financially after retirement. What trends are you seeing in this regard?
Dr.Evelyn Carter: That’s a fantastic question. The situation that Mr.Marchesi describes is not uncommon.In many developed countries, the establishment of robust pension systems, including public and private pensions, has allowed retirees to enjoy a pleasant lifestyle post-career. His story underscores a critical aspect: many seniors are now leveraging their financial resources,engaging in travel,and even entrepreneurship,which is reshaping our understanding of aging.
Time.News Editor: Interesting! In Korea, though, the transition to a super-aged society has sparked concerns about unpreparedness among older adults. They’re forecasted to experience significant financial stress. Why the discrepancy between these nations?
Dr. Evelyn Carter: The disparity is largely due to the differences in pension structures and cultural attitudes towards aging. Countries like Korea have seen rapid demographic shifts without adequate preparation or support systems in place. In contrast, nations like Japan and France have gradually adapted and implemented strong social safety nets, including effective pension systems that support elderly consumption and economic participation.
Time.News Editor: Speaking of economic participation, this article points out that seniors in the U.S. accounted for 22% of consumer spending last year, the highest since 1972! What factors are driving this trend?
Dr. Evelyn Carter: Several factors contribute to this trend. firstly, the baby boomer generation has accumulated significant wealth, which empowers their spending abilities. Additionally, their willingness to spend is less tied to fluctuations in employment since many are retired. Consequently, this demographic plays a crucial role in cushioning the economy against external shocks like inflation and interest rate hikes. Their continued active engagement in the economy, whether thru spending on services, travel, or even starting businesses, signals a vital shift in how we perceive older populations.
Time.News Editor: It’s extraordinary to think about the economic power of older adults as a ‘secret weapon’ as mentioned. Could you elaborate on how this realization impacts policy-making and societal attitudes toward the elderly?
Dr. Evelyn Carter: Absolutely. Recognizing older adults as economic contributors encourages policymakers to invest in elder-amiable services, infrastructure, and lifelong learning programs. This viewpoint shifts the narrative from seeing aging as a liability to viewing it as an prospect. When society acknowledges the value and potential of its older citizens, we can create environments that genuinely support intergenerational collaboration and economic engagement.
Time.News Editor: Captivating insights! As we wrap up, what are some strategies you believe could help nations like Korea prepare for the looming economic challenges associated with a super-aged society?
dr. Evelyn Carter: Implementing comprehensive financial literacy programs targeted towards the elderly is paramount. Additionally, enhancing public and private pension systems to ensure they’re enduring in the long term, as well as encouraging entrepreneurship among seniors, will be key. Lastly, fostering a cultural shift that celebrates older adults as vital community members will help in negotiating the transition into this new demographic reality.
Time.news Editor: Thank you,Dr. Carter! Your expertise sheds light on the many facets of aging societies and their economic implications. It sounds like while challenges exist, significant opportunities await us if we harness the potential of our elderly populations.
Dr. Evelyn Carter: Thank you for the engaging discussion. It’s vital that we continue to address these issues with both urgency and innovation!
Time.News Editor: And thank you to our readers for tuning in. Let’s keep the conversation going about how we can all prepare for the future together.