[Financial Planning for the 100-Year Life] Preparing for Single Life in Old Age as a Lifelong Single

"I am a single person in my 50s. I am highly educated, but as a freelancer, my income is unstable. In my younger days, I traveled a lot and considered myself a single person enjoying life, but as I get older, the loneliness becomes more pronounced. I also need to take care of my mother, so I am wondering how I should prepare for my own retirement." This was a question received at a retirement planning seminar.

Our society is entering an era of singles, where living alone in old age is becoming the norm. According to Statistics Korea, as of last year, there were 1,152,700 elderly people living alone, accounting for 22.1% of all elderly individuals. Particularly noteworthy is the rapid increase in lifelong singles, like the questioner. The percentage of people who have never married by around age 50 is called the lifelong single rate or lifetime unmarried rate. In 1980, this rate was 0.4% for men and 0.3% for women; by 2020, it had surged to 16.8% for men and 7.6% for women. In Japan, the rate has already reached 26.7% for men and 17.5% for women, and it is predicted that by 2035, both Korea and Japan will see the rate reach 30% for men and 20% for women.

The most important thing to focus on is preparing for a pension. A welfare-advanced country is not one where the elderly possess billions of won, but rather one where people can receive at least a minimum living expense as a pension until the end of their lives. In particular, single people without children to rely on in old age must cover their living expenses through earned income or asset income, which is not easy. After reaching their 70s, it becomes difficult to find work, and even if they have accumulated substantial retirement funds, many are reluctant to spend their money due to anxiety that their funds may not last as long as they do. If one could receive at least a minimum living expense as a pension until the end of life, it would provide significant peace of mind in old age.

If the only pension the questioner has is the National Pension, they should utilize systems such as additional voluntary contributions, the voluntary continued subscription system, and the deferred pension system to increase their National Pension benefits. In addition, if possible, they should also join an Individual Retirement Pension (IRP) and pension savings plans to maximize the total amount received from the three-tier pension system in retirement.

It is also important to prepare for health risks by enrolling in critical illness insurance. While health management through exercise and a disciplined lifestyle should be a priority, it is also necessary to prepare for unexpected situations. Monthly living expenses can be estimated and adjusted, but medical expenses are unpredictable and can become a significant long-term burden.

Another crucial aspect is developing the ability to withstand loneliness, known as "solitude resilience." Even if financial issues are resolved, it is not easy to escape from loneliness. However, one should not isolate themselves under the pretext of building solitude resilience. Even when living alone, it is important to engage in meaningful activities and hobbies that suit oneself and to make efforts to join new communities, such as local organizations.

The most important factor in avoiding isolation is the type of housing. When living alone, there is no welfare facility better than one's neighbors. In Japan, elderly couples or those who have lost their spouses tend to prefer small residences of about 18 to 20 pyeong, where shopping, medical care, hobbies, entertainment, and socializing can all be accessed within a short distance.

Finally, the point to emphasize to the questioner is the importance of having work even in old age. A relevant example for someone who may need to care for an elderly mother is "Nono Care," where younger and healthier seniors care for older seniors who need help due to illness or other reasons. In some Japanese nursing facilities, children in their 60s or 70s and parents in their 90s live together, with the children caring for their parents and other elderly residents while receiving a certain salary. In this era of 100-year lifespans, working is necessary not only due to insufficient living expenses but also for maintaining health and coping with loneliness.

Kang Changhee, CEO of Happiness 100-Year Asset Management Research Association