As the number of single households reaches 5 million in Korea, major changes are taking place in the way people save up for retirement. One-person households are playing a pivotal role in a shift among investors from the traditional preference for real estate to pension funds and other financial assets.

In the past, people bought apartments as an investment to rely on in their twilight years because their value increased reliably. As a result, real estate accounted for more than 70 percent of total assets held by Korean households.

But singles are less interested in buying homes. Instead, they tend to prefer other types of investment and tend to save their money in banks or put it into financial instruments that pay cash dividends.

According to a 2012 study by Statistics Korea and the Bank of Korea, every one-person household had on average W33.22 million (US$1=W1,064) worth of financial assets, more than 23 percent higher than the average per-capita financial assets held by a four-person household.

Financial assets accounted for 30 percent of holdings among one-person households, 3.6 percentage points higher than for four-person households, while real estate accounted for 66.8 percent, 1.5 percentage points lower.

Multiplying the figure to the number of households leads to the conclusion that the financial assets held by single households total W151 trillion, or 11.6 percent of all financial assets held by Korean households. Since single households account for 9.1 percent of all households, that proportion is relatively high.

Han Jung at Samsung Securities said the reason is that singles do not have to spend money educating and raising their children and are therefore able to save money.

Educational spending accounts for only 0.8 percent of expenditures for one-person households, and that was mostly for classes they took themselves. In contrast, educational spending accounted for 22.3 percent of the total expenditures of four-person households.

But experts warn that while singles tend to have more cash to spend, they need to prepare for their retirement since they have no children to support them.