"Even the Middle Class Can't Move In" Must Have Net Assets Over 400 Million Won [Senior House]

[5-2] This Level Is Needed to Be Middle-Class Elderly

Analysis by NH Investment & Securities 100-Year Life Research Institute
Targeting Households with Heads Aged 65 and Over
Divided into Quintiles by Elderly Economic Level

Housing Policies Needed to Match Economic Power of Middle-Class Elderly

What defines a middle-class elderly person? What are the standards for assets and income? Understanding the economic status of elderly people in South Korea is essential to establish appropriate housing policies for them. To grasp the actual income situation of seniors, we reached out to the 100-Year Life Research Institute at NH Investment & Securities.

Kim Jin-woong, the director who has been managing retirees' financial lives for 13 years, said, "Middle class is originally defined by ranking households by income and setting the range at 50-150% of the median income, but the downside is that this range becomes very broad." For example, if the median income of elderly people is 1 million KRW, the middle class includes those earning between 500,000 and 1.5 million KRW, which is a very wide gap.

Middle-Class Elderly Have Net Assets of 234.73 Million KRW

Director Kim explained, "To establish customized housing policies according to elderly income, it is reasonable to classify income levels into five tiers." This means dividing from the lowest to the highest income ranks into quintiles and then identifying the middle class accordingly. Based on last year's Household Finance and Welfare Survey by Statistics Korea, we analyzed households headed by individuals aged 65 and older.

The results showed that the net assets of the middle (third quintile) households were 234.73 million KRW, with an annual income of 25.8 million KRW. Kim said, "These can be considered the 'middle tier' of elderly households aged 65 and above in South Korea." The lowest quintile households, where the near-poor are concentrated, had net assets (12.81 million KRW) even lower than their annual income (14.7 million KRW). The wealthiest fifth quintile households had net assets exceeding 1.6 billion KRW and annual incomes reaching 70 million KRW.

When narrowing the scope to the Seoul metropolitan area (Seoul, Incheon, Gyeonggi), the third quintile (net assets 244.92 million KRW, annual income 23.68 million KRW) was similar to the national average. However, the income level and proportion of the fifth quintile households stood out. Both net assets (1.92525 billion KRW) and annual income (78.12 million KRW) surpassed the national average, accounting for 26% of all elderly households in the metropolitan area.

Middle-Class Elderly Find It Difficult to Move into Senior Welfare Housing

Jinwoong Kim, Head of the 100-Year Life Research Institute at NH Investment & Securities. Photo by Younghan Heo

Kim said, "Some senior welfare housing projects that claim to target the middle class actually require residents to be in the 'upper-middle class'." He explained, "At minimum, one needs net assets of over 400 million KRW and an annual income of about 35 million KRW to sell their current home, move into the facility, and cover personal living expenses."

How do seniors mainly earn their income? The average monthly National Pension benefit per person was 620,000 KRW (as of last September). Kim said, "Since pension income alone is far from sufficient for living expenses, many seniors continue to work. Although they have assets, many struggle greatly the moment their income stops. Those who ran businesses cannot let go of work, and wage earners keep seeking jobs even after retirement."

According to Statistics Korea's '2023 Elderly Statistics,' the employment rate among seniors was 36.2% last year. Among the elderly aged 65 and older (totaling 9.027 million), more than one-third?3.265 million?remain active in the labor market.

Kim advised, "To maintain a steady monthly income as one ages and to be able to choose housing like senior welfare housing, financial assets are more important than real estate. Preparing to receive pension income from money earned when younger ensures a steady monthly income and financial comfort in old age."

[5-2] This Is What It Takes to Be a Middle-Class Elderly Person