Seniors Sacrifice Retirement Savings for their Adult Children

New research shows older Koreans are being squeezed between the cultural obligation to provide for their adult children and the rising cost of marriages and housing in South Korea.

Net assets held by Koreans age 63-68 have shrunk by approximately one third over the past six years, while those held by every other age group have risen. At the same time, the rate of people age sixty and above who are finding employment is rising five times faster the overall rate. Commentaries online and in the news blame the financial desperation among retired Koreans on their obligation to pay for their children’s expenses long after their offspring have become adults. Netizens condemned adults who are relying on their parent’s savings, but also criticized parents who failed to get their children to stand on their own feet.

Seniors are looking at job notices on a bulletin board at a job fair.

Seniors look at job notices on a bulletin board at a job fair.

Article from Hankook Ilbo

Seniors in their sixties spend life savings on their children’s marriage

Net assets for senior citizens have declined by one third over the past six years.

Mr. A, 63, (name changed) retired in 2008 from the head of a commercial bank branch. He was confident in his financial future, having received a severance package of ₩300 million won (USD $282,600), which he combined with his other life savings.

Contrary to his expectations, he is now working as a temporary employee at a debt collection agency belonging to the bank he had worked for.

“I spent close to 300 million won on the marriages of my son and daughter, including what they needed as down payment for a house and dowry. With no income generated, I has spent 500,000 won per month to keep a decent life. What only left with me in a 30-pyeong (approximately 100 square meters) apartment.

Seniors in their sixties or older in South Korea now give support to their adult children at the cost of spending on their own retired life.

Retirement cut off the source of income for those seniors, and they see their wealth dropping ₩25 million a year on average as their grown-up children, even those with jobs, are financially dependent upon their retired parents.

A report entitled “The Employment Trend of Seniors in South Korea and its Implications”, released on October 7 by the Korea Labor Institute found that the average net assets possessed by seniors in the 63-68 age range has plummeted to ₩263.73 million, down approximately ₩150 million from ₩417.91 million six years ago.

Converted on a yearly basis, the net assets surveyed dipped by ₩25-30 million, which is equivalent to an one-third decline in six years’ time.

People in their early forties in 2006 saw their assets increase ₩44 million from ₩249.97 million over the past six years, while the group aged 45-50 also acquired more than ₩50 million in assets.

Lee Jun-woo, a professor at Hanbat University, said, “those in their late sixties are facing retirement without systematic preparation. A delayed economic recovery forces many adult children to monetarily rely on their parents, putting a big strain on them.”

The significant rise in the employment rate for those aged 60 or older during the past two to three years reflects this change in South Korea,” the professor added.

In fact, the recruitmenr rate for those sixty-years-old and above stood at 38.7 percent as of the third quarter in 2007. But the number rose 1.7 percentage points to 40.7%, more than five times higher than the increase in the entire average employment rate (0.3%) during the same period.

A job fair opens for seniors.

Seniors crowded a job fair in the southern port city of Busan.

Comments from Naver:

bro3****:

We don’t have to have children as no adult children care about their parents after marriage. Get your children educated until they graduate from high school, then have them pay for their college tuition. It’s long past the point when we should have stopped indulging children.

layy****:

Grown up children should make money for their own marriage. Relying on their parents for marriage expenses is a real shame.

mins****:

Let’s care more about parents. What else we can say about it? Take care of your parents. Children should be grateful to the parents who gave birth to them. By the time you realize you have taken advantage of them it’s already too late.

park****:

At this point, should I even have a baby? Come on! I would never do that. With money that I would have used to raise children, instead I will do whatever I want to do.

yhj0****:

This is so sad!

jiyu****:

Despite this article, few people on the streets seem like they are poor. Youngsters strut brand name clothes on the streets and dine at a fancy restaurants. On the weekends, roads are so crowded with cars that I can’t believe these days are hard times.

list****:

I think wedding culture in South Korea is wrong. Many people splurge on their wedding saying, “you know, this is the first and last time in my life I will get married.” But that is beyond me. Some couples with young children too easily decide to get divorced, they are just having friction after their lavish marriage. I hope weddings in this country get practical like the ones in the United States.

A senior sits on a stone step in deep thought at a park.

Comments from Daum:

지리산:

Parents who pampered their children have only themselves to blame [...]

슈림프:

What a distorted view of reality! The older generation made bubbles in housing prices with their speculation. That makes it hard for the younger generation to buy homes. So parents sells their houses to help their children to get ones.

해피캠퍼:

As Americans do, we need to make children stand on their own feet after their high school graduation, start to enjoy travelling during our retirement and donate our fortune to charity after we die.

반달곰:

What a fucking country! Adult children drive fancy cars while their parents are toiling.

sky:

Newly-weds on a tight budget need to start off with a small house and paying monthly rent in order to feel how rewarding it is to save money. Then later they can move into a bigger house. But in this day and age, all newly-wed couples want to start marriage life in a decent apartment. That’s problem. They don’t know the pleasure of saving money for a better living.

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  • harvz

    Kinda poetic, in a tragic way. The parents deprive the children of a childhood, then the kids grow up and deprive their parents of a retirement.

    • David

      Well said.

    • lonetrey / Dan

      I never thought of it that way…. that’s actually really well put.

    • Lou Maessen

      Ouch

    • Claude

      Whoa!! An interesting thought.

    • Kiwi

      And parents working in the fields and carrying cows up the hill all their life had a childhood?

  • FYIADragoon

    “Newly-weds on a tight budget need to start off with a small house
    and paying monthly rent in order to feel how rewarding it is to save
    money. Then later they can move into a bigger house. But in this day and
    age, all newly-wed couples want to start marriage life in a decent
    apartment. That’s problem. They don’t know the pleasure of saving money
    for a better living.”

    Nailed it. More so, WOMEN need to start having realistic expectations. Sounds like China and Korea have at least one thing in common.

    • Yeap

      This this this.

      It’s a problem with the middle class everywhere, but pretty extreme in Korea. Twenty-somethings expect to live better than their financially healthy fifty-year old parents without putting in any of the legwork. They don’t realize their parents busted their asses for 30 years before they could achieve that kind of comfort.

      • Sam Chung

        Time and again, I really don’t understand where everyone on Koreabang meets these “Koreans” that they love to talk about.

        As a twenty-something who live in Seoul struggling as anyone else, I don’t encounter a noticeable number of people who “expect to live better than their financially healthy fifty-year old parents without putting in any of the legwork.”

        I don’t know. Maybe as a twenty-something struggling in this fucked up job market, I guess it’s really natural that I only meet stressed out twenty-somethings pushing thirty who want nothing more than another cigarette break and a better financial prospect.

        • bigmamat

          If that’s the truth then tell it. Sounds like S.Korea isn’t a lot different than most places these days. The U.S. is having a terrible jobs crisis with young people, even college educated young people, baring the larger burden of a “slow” recovery. I’ve got grown children living with me because nobody wants to pay a living wage. I’m so sorry for your condition. We did this, your parents generation, we are responsible for your lack of hope in a better future. I apologize. So I’m doing what any parent would do in a world where I know my offspring will not make it on their own. I keep working, keep supporting their ambitions and keep a roof over our heads. It’s the least I can do.

        • chucky3176

          Like my brother in law. I think he worked about 2 or 3 years all of his life after he finished military duties. He’s now over 40 and probably retired good, since he has no plan whatsoever to go back to work. He has a wife and a kid. Their home was purchased by his dad. Also his dad bought him the car, but my brother in law complained he got a used car, and keeps bitching about how his parents don’t care about helping their kids. His dad did buy him a house, I don’t understand how he can be so ungrateful, when I have never gotten anything free from my parents ever. He kept going over to his parent’s home to beg his mother for pocket money without the knowledge of the dad. His dad keeps chewing him out every time they meet, telling him to lose weight, stop smoking, stop sleeping so much, and for god sakes, get his head and life back together. No use. They always fight, and he comes back to his mamma asking for few dollars. Mamma’s problem was that she gave him everything he asked for, and never disciplined him. The wife has zero respect for him, and the poor child…

          The problem with young Koreans is that they only look for desk jobs at big companies, while there are plenty of menial and hard but skilled labor jobs. They don’t want to be seen as getting down and dirty at those small companies working for 2 million won a month. What will their friends and neighbors say? So all these perfectly good jobs go begging, while the youth unemployment skyrockets. But the foreigners take those jobs, thank you very much. It wasn’t always like this. Their parents had no shame taking those hard jobs. They started low, worked hard, saved up, and then moved up. The youth of Korea today, they want to go right to the “moved up” part as soon as they graduate. And only the Chinese laborers do welding jobs at Daewoo shipyard, there’s no way I’m going to get my soft white hands dirty.

          .

    • A Gawd Dang Mongolian

      Well it’s a problem caused by both genders.

      Men feel inadequate unless they can provide these things, and women who are basically treated to this all the time, have grown to expect that as bare minimum.

      Reality? What’s that?

    • Boris

      “Sounds like China and Korea have at least one thing in common.” – They have a lot more in common than Koreans would like to admit (I have lived in Korea and now living in China).

      The problem I see it is what they want to project to other people. They want to project success even when they are heavily in debt. A man has to buy a house to get married and then a car if he hasn’t got one at the time of buying a house. It is ridiculous and I hate driving in China (another thing Koreans share with the Chinese, though I think it is worse in China as people walk in the middle of the bloody street and don’t bother looking either way just to name a few of my gripes).

      In England, people want to own a house, but would usually rent until they can. In Europe, people prefer to rent. This is lost on the people of East Asia (and other Asian/middle-easter countries e.g. KSA).

      • grelkin

        Much more than that too, they are both shallow, money lusting, pretentious societies with little human rights of free speech and wonderfully easy populations to control. Being under the yoke of Chinese dynasties throughout the centuries will do that. Two of a kind.

        • bigmamat

          It would certainly do both societies some good if they were able to throw off the yoke of neo confucianism but then what would they have, freedom and autonomy? Really, do we really have such an elusive thing even in western societies? I say no, we don’t, we are all slaves to money and the power that it brings. Now that I understand just how rigid the social structure is in East Asian cultures I understand the fierce competitiveness and scramble for the illusion of having money. The money lusting is nothing more than lusting after a better place in society. Is it a good thing, no but I think the last time a bunch of chinese people got together to demand more freedom the government shot them all.

  • Eric0912

    But … people do retire VERY early in Korea, don’t they? No wonder the money doesn’t last.

    And I thought the cultural obligation was for the children to provide for their parents (isn’t that the law?), not the other way around?

    • Sam Chung

      While it’s true that people retire around 56~65, the fundamental problem is the lack of any significant social security for those retiring.

      Traditionally, the price of rapid development and forced industrialization has been to ruthlessly discard people after they have been used up by the companies and industries, and employers and the state reneged on any obligations to protect the livelihood of retirees by brushing them away by giving a condescendingly meager sum in “retirement money”.

      And while it is a cultural norm and expectation to support your elderly parents, a combination of (1) lack of responsibility in younger generation, (2) increased financial and social pressure on young workers, and (3) many elderly people’s stubbornness in not being a “burden” on their kids drives many retirees to economic destitution and many suicides.

      Korean society and economy has changed so radically that continuing on the norm of “supporting your parents” becomes absurdly unrealistic, and the epidemic of elderly suicide is the corollary of prolonging a social arrangement that obviously doesn’t work anymore.

      The state and the employers should do more than to talk about “welfare populism” and “welfare reform”. Western Europe was able to do this because of their strong social democratic currents, and US–despite all its schizophrenic neoliberal trappings–was lucky enough that FDR pushed through Social Security with all his political capital (and its corollary, the retirement planning industry) so the destitution of elderly is not acute as it could have been

      • bigmamat

        Yeah but it’s going to get there, the destitution. Mainly because of the retirement planning industry. Which for all intents and purposes turned out to be a giant ponzi scheme for investment bankers. The truth is no society, even my wonderfully “democratic” one is not without blame when it comes to using up and discarding people. Asian societies aren’t really any worse they are just more blatant about it.

        • nana

          At least E. Asia still has pensions and life-long employment, for the time being…

      • chucky3176

        At least they give you a lump sum huge severance package when you stop working for whatever reason, that Americans could only dream of.

  • holdingrabbits

    Imagine what a shitty kid you must be to knowingly rob your parents of their retirement and force them to live in a box-like apartment after a life of hard work. You could easily live in the box yourself and do your own hard work…but in Korea, looking successful is more important than being successful.

  • Jang

    See, too many Korean adults never do grow up. It’s not only a money thing, the parents in their 60′s are probably still cooking, cleaning, and doing the laundry for their kiddies in their mid-thirties. But is this news? I’ve known this for a long time, but I guess I didn’t realize how hard the 35 year old Korean sucks on their parents you know what, or on their older parents bank accounts.

    But really, if parents are stupid enough to pay $150 thousand dollars each on 2 weddings without thinking that they just might need some of that money someday, well then they get what they deserve, long life moochers following closely behind waiting for the money.

    • commander

      Those grown up children will also sacrifice their savings for their aduly children later in their life.

      What do you think of this?

      • Bryan Cheron

        If they have children. If the culture doesn’t change such that they are no longer expected to in 25-30 years.

  • Mighty曹

    On a similar note, I think in most Asian cultures, especially those of Confucianism, it’s a way of life that the parents take care of the children through college until they join the work force. Then the children, in turn, will take care of the parents during their retirement years. Often all living under one roof as one big happy family.

    In modern times, this seems to have shifted more toward the Western approach where the elderly parents are put in ‘senior’ homes. But that’s still better than not caring for or repaying at all.

  • takasar1

    and here we have a wonderful reason for korea/japan’s aging crises/low fertility rates.

  • ChuckRamone

    Weddings have become grotesque monstrosities, ugly displays of conspicuous consumerism and exhibitionism, huge and pointless wastes of money, self-obsessed ceremonies devoid of much of their original meaning, not just in Korea but in a lot of places. More people need to follow the trend of having modest wedding ceremonies or not at all. It’s too bad the children and parents in Korea are willing to do this because of society’s expectations. I wish more Koreans would grow some balls and say who gives a shit what these other Koreans think, and make some rational, financially sound decisions.

    • chucky3176

      And they last about 30 minutes. Then lunch. Then it’s over.

      What fucking insane waste of money.

      It’s really no wonder why nobody wants to have kids, and why nobody wants to get married even (with average marriage ages going rapidly up).

    • ilovebenelux

      You know the biggest point of the system is to get back your money that your parents have spent over others.
      People actually record name with how much money they give on a book.
      And they return the exact amount of money

    • Sam Chung

      As if all Koreans go through extravagant, over-the-top ceremonies, let

      alone afford it.

      As if you can judge an entire people from your meager clique of acquaintances and newspaper articles

      As if you have the right to judge anyone with your condescendning gaze of the “other”.

      • bigmamat

        So then tell us like it really is…I keep seeing this same post in almost every comment section. If any of this stuff we are reading isn’t true then enlighten us. Don’t just “as if” since you know help spread knowledge and wisdom.

    • takasar1

      I’m guessing she walked out on you…

  • MyMotto

    I think people just need to realize certain things are for people with money. Go ahead and waste all your money on a big ass wedding, then be surprised when your broke. Either that or learn to get crafty.

  • One for all

    Erm….stop spending $100-200 thousand on lavish weddings and expensive wedding gifts just to show off to society.

    And stop giving your 28 year-old monthly pocket money. f he/she needs to borrow money, by all means lend them some, but stop treating your fully-grown adult offspring like darn 12 year old princes and princesses!

  • lonetrey / Dan

    Upon their own heads, really. And in such an unnecessary way too.

  • Stefan Xu

    “Grown up children should make money for their own marriage. Relying on their parents for marriage expenses is a real shame.”

    I agree with this!

  • KCdude

    This does not promote any healthy economy run by free market capitalism. Now because of the demographic conflicts like in this news, I’m afraid that South Korea will eventually adopt a socialist welfare system. What is this? The future North Korea? This is absolutely unacceptable for South Korea to do this to its own people,

    • bigmamat

      Well if “free market” capitalism guarantees a “healthy” economy then I guess you haven’t been paying attention to current events for past 20 years. Socialist my ass. Here’s what Korea and even my country needs to do. We need to decide if we are going to behave like lizards or if we are going to behave like thinking human beings. What’s the point in having a brain and being aware of more than just the need to eat, shit and reproduce if we are going to organize ourselves into packs that don’t do anything more than fight for scraps after the alpha dog has already eaten.

    • nana

      Please inform yourself. A socialist wellfare economy would be the best way to ensure demand, integrate the mass of the population, and increase labor productivity and educational skills. What McDonalds SOP can you refute that with?

  • ronchap3

    As far as I can tell. Their is no one here that can judge the Korean people.
    Everything is done for the children. Including education. Which some say deprive the children of a childhood. Heck they even stop air traffic on days of big exams to not disturb the children taking tests. The children work very hard to gain respect from their parents and teachers. There are reasons for this.
    “The children will never have to suffer the way their parents and grandparents did” ‘The children will never have to search for food to stay alive.”
    Korea has come so far in such a short period of time. If you have time read some Korean history covering the last 60 years or even just the last 30 years.
    You will be astonished.
    I’m sure like Korea has done in the past to solve issues. They will find a solution to this “Seniors in their sixties spend life savings on their children’s marriage” It’s a tradition. The parents love their children very much and in the back of their minds are still the horrible memories from the past.

    http://youtu.be/mmeVI0NKjpI

    http://youtu.be/uzuy0faDzn4

    http://youtu.be/3Vakt2zW9bA

  • ytuque

    And the poor Korean parents have spent large sums of money on a 2nd rate education for their children in Korean universities where they memorize much and learn little. Degrees are awarded for such academic disciplines as Flight Attendant, Beauty Design, Judo, TaeKwonDo, Golf, Security Officer, and other nonsense.

  • The Real Truth

    With these perverted traditions, the Koreans have created for themselves a kind of Hell. Perhaps this is why church is so popular here? The older generation by and large earned the vast bulk of their savings via property bubbles and speculation. These people were farmers less than one generation ago, and most of them simply hit the ghetto lottery when real estate prices shot through the roof.

    This created a real estate market where the prices are artificially high, and where tiny little plastic box apartments in dilapidated buildings sell for astronomical prices, (relatively speaking). Since the older generation subside largely on real estate gambling, and support their grown, lazy, unproductive, ungrateful kids with the proceeds, by extension, the Korean government has to do everything is can to keep the bubble going, or at least stable. The slightest drop or crash is going to have profound effects on the Korean economy.

    When people stop paying half a million dollars for 20 year old crumbling apartments, you’re going to have a massive swathe of the population who are going to go bankrupt almost overnight. When the bubble bursts, it will burst quickly. Panic-selling will drive prices down further, as the peasant class scramble to unload their high priced, dumpy apartments in order to pay their bills. The rich (maybe .5% of the population) will of course enjoy this, and use the opportunity to buy.

    Korea’s export economy is losing steam. Let’s not kid ourselves here. There is no replacement economic model that will suit Korea. Service economy? Don’t make me laugh. Tourism based economy? Never. As production of Korea goods shifts towards China, more and more people will be jobless. The Korean “Jeonse” apartment deposit system will fail eventually as well, because you can only pay back old deposits with new money up until the point where you no longer have tenants because the prices have gotten so high. Once that point comes (hey wait, jeonse prices are already too high), the domino affect will begin.

    Korea has the highest household debt ratio in the developed world. Koreans have and use the most credit cards out of all OECD countries. The minimum wage is very low, and education and marriage “fees” are wiping out the real estate derived savings that the older generation has. Korea is in for a major crash. A hard, painful, IMF style crash. Koreans need to learn to stop living like “rich” people by blowing their parents savings and juggling credit cards The older generation knew to save money. They knew the value of cash. I’d be surprised if the Korean economy did not implode within the next 5-10 years.

    • ChuckRamone

      You kinda made it sound like you’re some kind of an economist or something but you obviously don’t know what you’re talking about.

      • The Real Truth

        We should all listen to you. Let’s bask in the glory of the Klown economy. Borrow, borrow, borrow, sign up for more credit cards. And when the credit is tapped out, we will simply ask mommy and daddy to foot the bill for our weddings, apartments, new BMWS, etc. Pick a single point in my post and prove it wrong. I know you would like to believe that your parents’ savings isn’t going to vanish, and that they’ll be able to support you forever. The Klowns had a similar belief before the 1997 crisis.

        The direction in which the economy is going is not sustainable. Koreans cannot continue to live “rich” with loans, parents’ money and credit cards. Wages have not increased to support such a lifestyle. Real estate prices have reached buble heights due to speculation here (half a million dollars for a crumbling 20 year old apartment?) More than a few Koreans are happy to take their parents’ life savings, and then boot mom and dad out to the countryside to live in poverty while they finance their dreams in the big city.

        Outrageous housing prices, stagnant wages, the depletion of mom and dad’s savings and the extreme use of credit to fund a “rich” image and lifestyle will all work together to bring the Korean economy down again. The Korean won isn’t like the USD; the Klowns cannot simply print more of it like Bernanke can. There is no demand worldwide for Korean currency.

        You don’t have to believe anything I post. However, I should mention that I do get paid and derive my income directly from making (short term) projections regarding the Korean economy, and that I am doing quite well in this regard.

        • ChuckRamone

          Your whole disqus account was created for the sole purpose of talking trash with rants of thinly veiled contempt. Nothing you say can be taken seriously because of this. That makes you the clown. People read your posts and snicker at the stupidity of all the effort you put in. But we all could use a laugh. Since you’ve already exhausted the alan greenspan act, maybe you could do a poor impersonation of a “reasonable historian” next, remove the dunce cap and put on your scholar’s hat. Keep jesting, you have a burgeoning talent for playing the fool.

          • The Real Truth

            You cannot refute anything I have written, because you are probably an English teacher with no grasp on the current economic conditions whatsoever. Keep drinking the Kimchi Koolaid my friend. Everything is wonderful. The economy is running perfectly. Unemployment/early forced retirement are not issues. Highest household debt in the OECD is not an issue. Koreans are all richee richee, with tons of savings, and no credit card debt. Keep digging into the dictionary for big words, because you cannot refute anything that I have written about the current economic situation.

          • nana

            I agree that the korean economy has been cheerleaded by the Western press for twenty years now. Why? Because it’s the only market ‘success’ story since Japan 100 years ago.
            However, it’s difficult to predict the situation. As long as Korea sits behind a tariff wall and exports relatively cheap and technically sound goods to an open market West (declining purchasing power not withstanding), it may toot along in a sustainable nature.

        • chucky3176

          You really have no clue what you’re talking about here.

          Half a million dollars for a crumbing 20 year old apartment? Where? Maybe in Gangnam. Once again, it’s all about location. If you want to live in the central south western Seoul, you’re going to pay for it (like anywhere else in the world where real estate in central locations are expensive). But in reality, you can get much cheaper affordable apartments in non-central areas. That is if you have enough money to buy. The problem comes in when everybody wants to live in Gangnam. Of course they’re going to have problems finding an affordable place. And your comment about “xtreme use of credit to fund a “rich” image and lifestyle” is completely laughable. Koreans do not overspend on consumer goods. In fact, they underspend so much that they undermine the domestic economy. The credit borrowings by Koreans are usually for schooling, deposits on home rentals, and fund the mortgages. The vast chunk of Korean savings and borrowing are eaten up by education costs and home costs – not because they’re splurging on luxury goods to make themselves look rich, as you claim. You haven’t a clue what you’re talking about.

          • nana

            He did use an extreme example with pricing; however, for a country that was at an African level during MASH TV show, prices have risen unsustainably. When I lived in an older part of Gangnam, the rent was only 600 dollars/month, chump change in NYC or Los Angeles.

    • chucky3176

      Oh the sky is falling, Korea is going to collapse! Head for the hills!

      We heard it all before. When is this all going to happen?

      I won’t hold my breath.

  • ytuque

    Despite all this spending, young Koreans are unhappy according to multiple international surveys.

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