Lifetime Pension Product Ensures Spouse Receives Same Amount After Death
Addresses Limitations of Existing Home Pension Products
Available for Homeowners with Properties Valued Over 1.2 Billion KRW
While life expectancy continues to rise, many people remain unprepared when it comes to securing funds for their retirement. In particular, 79% of the assets held by households in South Korea headed by individuals aged 60 and older are tied up in real estate, making it a reality that seniors in their 60s and above have a severe shortage of assets that can be converted into cash for their living expenses in retirement.
According to a survey by Hana Financial Research Institute of baby boomers (aged 50 to 64, holding financial assets between 100 million and 1 billion KRW) who are set to retire in 2024, the largest proportion of respondents said they felt anxious about their financial situation after retirement (58.5%). The next most common concerns were the risk of serious illness after retirement (54.2%) and a lack of living expenses (47.4%). A significant share also responded that they felt anxious because they were not financially prepared for retirement (39.3%), indicating that, overall, there is little capacity for retirement preparation due to reasons such as living expenses, supporting children, and household debt.
Additionally, 71.1% of baby boomers approaching retirement said they are concerned about designing their cash flow after retirement. Among seniors who own high-value real estate but have relatively small financial assets (owning real estate worth at least 1.7 billion KRW based on actual transaction prices and holding less than 300 million KRW in financial assets), this figure rose to 89.5%. It was found that baby boomers with these characteristics are the most concerned about post-retirement cash flow. Their anxiety is further heightened by the fact that they have outstanding loans, including mortgage loans.
At the same time, there is a strong tendency (46.2%) to want to maintain current housing conditions even after retirement. When asked about their willingness to subscribe to a pension product using their home as collateral, 43.6% of those with real estate valued at 1.7 billion KRW or more, and 58.5% of those with less valuable real estate, responded positively-demonstrating high interest in products that allow them to secure cash flow while retaining ownership of their property. Overall, baby boomers hope to enroll in a home pension after a certain age when it becomes difficult to secure additional cash flow, regardless of asset price volatility or the status of their other holdings.
To address these challenges, Hana Financial Group has become the first in the financial sector to launch "Hana The Next My Home Pension," a reverse mortgage loan product that accepts homes with an officially assessed value exceeding 1.2 billion KRW as collateral. The Korea Housing Finance Corporation’s home pension allows retirees to continue living in their existing homes while converting real estate assets into cash for retirement, but it is only available for homes with an official value of 1.2 billion KRW or less.
"Hana The Next My Home Pension" provides lifetime pension payments secured by the home in which the individual resides, while also guaranteeing the right to continue living there. Even if the individual passes away, the spouse will continue to receive the same pension amount for life. If both spouses pass away, the property is disposed of through a predetermined process and any remaining assets are provided to the designated beneficiaries (such as children). Notably, even if the property value declines, the non-recourse structure ensures that heirs are not liable for any shortfall, making the product even more attractive.
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