Economic Crisis Leading Baby Boomers to Retire Early

Kim, a former branch manager of a commercial bank in Korea, was born in 1955, when Korea’s birth rate began skyrocketing after the Korean War.

Despite being cash-strapped, his father was willing to send Kim, the eldest son among six children, to Seoul for study early on because Kim performed well in school. After failing to pass the exam for admission to a prestigious middle school in Seoul, however, he settled for a school in his hometown in South Jeolla Province. After graduation, Kim was admitted to one of Seoul’s top high schools. In a classroom with more than 60 students, he studied hard to enter university.

Kim entered a prestigious private university in 1975, joined the Army two years later, and returned to school in 1980 when the country was in the midst of its democratization movement. When he graduated from college in 1983, the country was recovering from its second oil shock and the economy grew a whopping 10.8 percent. Kim benefited from the booming economy. Several companies, including the bank he worked at, wanted to hire him.

In 1984, a year after he joined the bank, he got married and rented a small house in Seoul`s Yangcheon district. Around 1988, when the Seoul Summer Olympics were held, housing prices soared, forcing him to move five times. Finally, he managed to buy a decent apartment unit in Yeouido, Seoul in 1995.

“It never occurred to me that I`d retire early,” Kim said. Because he thought the banking industry was where he should work for life, he was shocked by the financial crisis in 1997. He saw many of his colleagues in their 50s leave the bank.

When Bear Stearns went under in March last year, he felt something ominous was coming.

“Since the bankruptcy of Lehman Brothers in September last year and the ensuing collapse of financial sector, rumors began swirling that the company would encourage early retirement. I thought it was my turn,” Kim said.

"On Dec. 23 last year, I got a call from the personnel department. I was offered a choice between early retirement with 34 months worth of salary and a peak wage system that guarantees job security until age 60 in return for a 50-percent wage cut. I chose the former.

Baby boomers are expected to begin retiring in 2012, when those born in 1955 reach the retirement ages of 57 to 60. As shown with Kim, however, the global financial crisis is advancing their retirement.

Park Deok-bae, a researcher at Hyundai Research Institute, said, “If the baby boom generation, which accounts for 14.7 percent of Korea’s population, retires, Korea will suffer from sagging consumption and a labor shortage.”