Rapidly Aging Korea Expected to Surpass Japan as an 'Elderly Powerhouse' by 2030

Entering a Super-Aged Society in 3 Years... By 2030, Korea's Aging Index to Surpass Japan
Japan Extends Healthy Life Expectancy and Delays Pension Receipt as Elderly Social Security Costs Soar

[Asia Economy Intern Reporter Lee Gyehwa] South Korea is expected to enter a super-aged society in 2025 and become the world's largest 'elderly nation' surpassing Japan in the 2030s to 2040s. On the 14th, the United Nations (UN) and Statistics Korea predicted that South Korea's aging index will reach 301.6 in 2030, surpassing Japan's 293.8. The aging index refers to the ratio of the population aged 65 and over per 100 children aged 14 and under.

The aging society is classified based on the proportion of the population aged 65 and over: aging society (7% or more), aged society (14% or more), and super-aged society (20% or more). Japan entered these stages in 1970, 1995, and 2010, respectively. Currently, Japan is the world's leading elderly nation, with 3 out of every 10 people being elderly.

South Korea is aging faster than Japan. It took Japan 25 years to transition from an aging society to an aged society, but South Korea took only 18 years from 2000 to 2018. As of last year, the aging index was 139.5 for South Korea and 253 for Japan. However, South Korea's fertility rate is 0.75 (as of the second quarter this year), significantly lower than Japan's rate of around 1.3, so South Korea's aging index is expected to surpass Japan's by a large margin. Accordingly, South Korea is expected to become the world's largest elderly nation, overtaking Japan in the 2030s to 2040s.

Experts advise that South Korea should refer to Japan's measures and trial-and-error experiences. Japan has been preparing and implementing aging countermeasures for over 50 years since entering an aging society in 1970.

Japan has expanded health checkups for the elderly to detect health abnormalities early and delay the stages requiring nursing care. Six national research institutes, including the National Cancer Center, jointly established the '10 Commandments for Extending Healthy Life Expectancy' in 2021, which include smoking cessation, alcohol moderation, and salt intake reduction. Various elderly health promotion programs are also operated centered on local governments and communities.

Nursing care is the biggest issue in Japan. In 2019, more than 100,000 Japanese people quit or changed jobs due to nursing care. By around 2040, there is expected to be a shortage of 690,000 nursing care workers. Nursing care costs, which were 10.7 trillion yen in 2020, are projected to increase to 25.8 trillion yen by 2040. Daiwa Institute of Research analyzed that the economic loss due to nursing care-related job changes amounts to 650 billion yen annually. Consequently, the Japanese government is supporting the employment costs of caregivers and accelerating the development and distribution of nursing care robots.

Japan's focus on extending healthy life expectancy and nursing care is due to costs. The Japanese government allocated 36.2735 trillion yen (about 345 trillion won), one-third of this year's budget, to social security expenses. Sixty-six percent of social security costs are related to the elderly.

Social security expenses are expected to increase to 190 trillion yen around 2040, when the elderly population peaks. Of this, 80% is expected to be spent on the elderly, including 73.2 trillion yen for pensions, 68.5 trillion yen for medical care, and 25.8 trillion yen for nursing care.

Due to budget and social costs, Japan is encouraging the elderly to continue working after retirement. Since April 2020, Japan's retirement age system changed from mandatory employment until age 65 to an employment effort obligation until age 70. The Japanese government explains that increasing the number of working elderly people delays the start of pension receipt and reduces medical and nursing care costs.

From April this year, the Japanese government allowed the pension start age, currently at 65, to be delayed up to 75. They are also considering extending the basic pension (National Pension) contribution period from 60 to 65 years by 5 years. Discussions are ongoing to reduce medical expenses for the elderly while increasing their financial burden.