This is Haerim. Today, I have a news about retirement and how to prepare for it. I am aware that the idea of retirement does not seem much related to many of you who are the young generation in the society. You might think that retirement plan is something that is too early to think about right now. However, without enough preparation, aging is to bring negative social and political effects. I am telling you this, as many people in our society are not ready to financially support their own livelihoods after the retirement. This might become your story. The concern seems even more serious, considering that the life expectancy is growing ever higher and higher while the period of economic activity and employment is limited or even shortened. Now, can you feel that it is extremely important to start thinking of the retirement plan?
On 12th of September, ‘Retirement Strategy Forum 2012’ was held at Westin Chosun Hotel in Seoul. I had a chance to attend the forum and found out that this is something that I want to share with the readers of this blog. The forum examined and discussed the aging situation in Korea, and looked for possible solutions to prevent the elderly from experiencing poverty. The forum also focused on effective retirement strategies and suggested feasible policies to provide benefits for the seniors.
The Chairman of Financial Services Commission, Kim Seok-Dong, delivered the opening ceremony speech. Mr. Kim, being aware of the 100-year life expectancy era, expressed his opinion about the retirement issue and suggested preparing plans for the future. Mr. Kim referred to a figure from the UN report, saying that “the average age across 31 countries is going to be over 80 years just in the near future. Aging society is experienced in many of our neighboring countries.”
The rapid aging in the society, of course, needs a large volume of welfare expenses, which is to let the economy shrink. The government is responsible for some extent of burdens to provide social pensions. The amount of pension is limited to less than 0.3 % of the total GDP for now, and it is expected to increase to 1.2% by 2030. These figures are pretty alarming to those people in their 40’s and 50’s who are about to worry about their lives after retirement.
So, what if we are not prepared enough for the 100-year life expectancy? As you can guess, a social conflict between generations, the old and the young, will happen. Foreseeing this probable conflict, the government has suggested few policy measures, ranging from benefits for the elderly to efforts of decreasing fertility rate. Last year, the government proposed a new policy for the 100-year life expectancy, and formed a task force preparing for the long-term social changes. Also, the government introduces some financial products about the pension system. The private pension policies were deregulated to expand private pension market replacing the public pension system. For the development of pension policies, it is emphasized that the role of capital market is really important. The government is thinking about reorganizing the structure of the capital market in a way which contributes to more effective pension system as well as encourages the public investment to put more emphasis on the pension system.
After attending the forum and listening to Mr. Kim’s address, I thought that every individual needs to build their own financial and economic capabilities for their retirement. Totally depending on the hands of government and public pension does not seem sufficient. It is now time to have a strategic planning for our lives ahead so as not to make your life burdensome after retirement.