Eight out of every 10 middle-class Koreans feel they are poor, and a majority of them face falling into poverty after retirement. Few have the capacity to save up for their retirement due to the high cost of living and education of their children.
As a result, most retirees have no means of supporting themselves other than paltry monthly payments from the National Pension Service.
NH Investment and Securities in a report released Wednesday detailed the characteristics of Korea's average middle-class household. Statistics Korea classifies middle class as people earning between W1.88 million and W5.63 million a month, and 65.4 percent of total households still fall into this category (US$1=W1,182).
NH surveyed 1,128 middle-class people in their 30s to 50s.
◆ Ordinary Lives
The survey suggests that the average middle-class household owns a 102.4 sq.m apartment and a mid-sized or larger car, drinks 2.1 cups of coffee a day, spends W6,200 on lunch and works 8.2 hours a day.
Middle-class workers spend only 1.7 hours on average a day with their family, but half of them went on holiday overseas over the last three years. They saw a movie or attended some other cultural performance 0.9 times a month.
But only 19.8 percent of the respondents see themselves as middle class, while 79.1 percent claim they are in the low-income bracket. They say they would need a monthly salary of at least W5.15 million to satisfy the living standards they desired, and net assets of at least W660 million.
Instead, their average assets are W230 million. Statistics Korea classifies middle class households based on monthly income, but NH says consumption and quality of life factors must also be considered.
◆ Poverty After Retirement
Also, 39.9 percent of the people surveyed said their monthly income after retirement would be less than W1 million a month, the lowest limit for a senior citizen to still be considered middle class.
That means four out of 10 believe they will end up being poor after retirement. The proportion is higher among men in their 50s nearing retirement.
What makes their anxiety plausible is that as many as 48.7 percent said that they are not preparing for retirement, while 11.3 percent admit they do not know what their financial situation after retirement will be.
A mere 13.9 percent are saving money in the National Pension Service, retirement pension run by the Labor Ministry and private pension programs. NH said many want to save up for their retirement but do not have the capacity.
Each household spends W373,000 a month on private crammers for their children and W136,000 on the weddings or funerals of friends and relatives. These extra expenditures make it nigh-impossible to save up for retirement.
"Living a middle class life is not as easy as it sounds," said Lee Yun-hak, an expert in senior living. "It's a good idea to postpone retirement as long as possible or start putting money aside in pension programs and live in smaller homes."