[Financial Planning for the 100-Year Life] Retirement Preparation Starts in Your 20s and 30s... Age-Appropriate Strategies

"I am 34 years old this year, and I consider myself lucky to be watching this video now." This is a comment left by a subscriber on a YouTube video that provided a lecture on retirement preparation methods by age group. In the early 2000s, when I first began giving lectures on retirement planning, most of the participants were in their 50s and 60s, either approaching retirement or already retired. However, in recent years, the composition of participants has noticeably changed. The proportion of people in their 30s and 40s has increased, and I even meet working professionals or university students in their 20s. There are also more cases where couples in their 30s and 40s attend evening or weekend classes together.

In the era of 100-year lifespans, starting retirement preparation in your 50s or 60s is far too late. To put it bluntly, at this age, the only option is to adapt to the circumstances given. Proper retirement preparation should begin in your 20s or 30s, starting as soon as you enter the workforce. What specific preparations are necessary?

First, for those in their 20s and 30s, the most important thing to do as you begin your career is to enroll in the three-tier pension system (National Pension, Retirement Pension, and Private Pension). In the age of 100-year lifespans, securing at least the minimum living expenses until the end of life through these three types of pensions is crucial. Of course, it is also important to apply the investment knowledge gained from managing retirement and private pension assets to other types of asset management. Another essential step is to invest in your own human capital to increase your value in the job market. You must continuously invest in yourself so that you can earn a higher salary and work for a longer period of time.

Once you reach your 40s, you may start to notice warning signs regarding your health. Therefore, it is time to begin serious health management. This means not only quitting smoking and reducing alcohol consumption but also making exercise a regular habit. It is also advisable to purchase at least one special disease insurance policy in case of emergencies. Another important step to take in your 40s is to reduce spending related to your children and to provide them with financial independence education to minimize child-related risks. For this, couples should receive proper education together on topics such as child-rearing and marriage, so that they can share common values and convictions.

In your 50s, you need to restructure your household assets and prepare for work that you can continue after retirement. Although you may have more assets than other age groups, this is also the period when you tend to have the most debt, so paying off debt should be your top priority. If the debt was incurred to cover living expenses, you should start by lowering your standard of living. If a couple whose children have all become independent still holds excessive real estate while carrying debt, it is even more urgent to restructure their assets. In addition,it is important to prepare for work that can be done after retirement. Whether it is income-generating work, social contribution activities, or hobbies, having something to do is essential for a fulfilling life and marital harmony. In the era of 100-year lifespans, you need to have the mindset of being 'active for life,' and live a cyclical life such as 'study → employment → study → re-employment.'

In your 60s, it becomes more important to adjust your lifestyle to match the wealth you accumulated during your working years, rather than trying to increase your assets. True financial independence means developing the ability to adapt yourself to your given financial situation. If you feel that the wealth you accumulated while working is not enough for retirement, you should think about ways to live within your means. If you believe that you have saved enough thanks to your hard work, you should consider how to use your money for meaningful purposes.

In your 70s, you need to prepare for the possibility of living alone in old age. As of the end of 2023, 22% of people aged 65 or older live alone due to reasons such as bereavement, lifelong singlehood, or divorce later in life. In particular, 78% of those aged 70 or older who live alone are women. Pensions to cover living expenses and insurance for serious illnesses should have been prepared during your working years. In addition, it is important to prepare for happiness within the local community, to make retirement arrangements that consider a spouse who may live alone for many years, and to make rational choices regarding housing arrangements.

Kang Changhee, CEO of Happy 100-Year Asset Management Research Institute