Korean elderly citizens the poorest among OCED economies

Statistics have shown that the ratio of South Korean elderly citizens’ disposable incomes is the lowest among 34 member economies of the Organisation for Economic Cooperation and Development (OECD) and their relative poverty ratio is the highest among the OECD member economies. The income distribution index announced Wednesday by the OECD reveals the realities that Korean elderly citizens are facing after retirement.

The ratio of the disposable incomes of South Koreans at ages from 66 to 75 stood at 62 percent of the average income of the entire Korean population. In other words, assuming that Korea’s per-capita disposable income is one million won (895 U.S. dollars), that of Korean elderly citizens amount to 620,000 won (555 dollars). In Korea, the ratio of disposable income of people aged between 51 and 65, just before retirement, to the per-capita income is 103 percent, higher than the average. After retirement, however, the ratio falls sharply. The disposable income ratio of U.S. citizens aged between 66 and 75 is 102 percent, and that of the Japanese in the same age group stood at 89 percent. In Sweden and Norway with advanced welfare systems, the ratio is 95 percent, similar to their national average.

The poverty ratio of Korean elderly citizens is also at a serious level. Among people aged between 66 and 75, nearly 46 percent of them have a median income of 50 percent or less of the national average. This means that 45 out of 100 elderly citizens have incomes that are half or less than those of median income earners. The average poverty ratio of OECD member economies stands at 11.3 percent, far lower than that of Korea.

Korean elderly citizens’ quick fall to poverty is attributable to earlier retirement, rigidity in the labor market and an insufficient social safety network. The legal retirement age of employed people is 55, but most office workers retire earlier. In addition, it is extremely difficult for them to find new jobs after retirement.

The national pension program is not enough to provide them with post-retirement safety pin. Government employees and teachers have better pension plans, but the national pension system’s benefits are just a little bit over pocket money. Excessive expenditures in education are another factor that creates the elderly poor. In the U.S., parents financially support their children until they graduate from high schools. Once they get into universities, they become financially independent from their parents and foot the bills for their education with scholarships or student loans.

We cannot go back to the tradition of agrarian society, in which parent inherit all their assets to their children and then depend on them. In aged society, where many people live until 100 years of age, the government and individuals should be aware that they have to prepare for post-retirement life.