Figures published by Statistics Korea show that Koreans start to earn more than they spend at age 28, but that by age 60, they were back in the red
People make their way across a crosswalk in central Seoul’s Gwanghwamun on Thursday morning. (Yonhap News)
Posted on : Nov.26,2021
South Koreans start living in the black at the age of 28, peaking at age 41, then fall back into the red at 60, government figures show.
The 2019 national transfer accounts, published by Statistics Korea on Thursday, show that in terms of per capita life cycle, spending exceeded labor income for Koreans from birth to age 27. There was a large deficit between the ages of 6 and 17 because of educational expenses, with the biggest deficit occurring at 17 (34.37 million won).
At the age of 28, labor income begins to overtake spending, with Koreans making the most labor income at the age of 41 (36.38 million won, or US$30,500) and reporting the biggest livelihood surplus at the age of 44 (15.94 million won).
Spending regains the lead over income once individuals reach the age of 60. Individuals’ livelihood deficit is around 15 million won in the 70s and nears 20 million won in the 80s. As people gradually push back retirement, the age when surplus switches to deficit was also delayed one year, from 59 in 2018.
National transfer accounts form a dataset of age-based spending and labor income for all Koreans that is used to identify the surplus and deficit structure of economic activity for each age group. The national transfer accounts were first published in January 2019, reflecting 2015 data, with the 2016 data coming out that December. The 2017 data was released in December 2020, and now the 2018 and 2019 datasets have been released together.
In 2018, the livelihood surplus period lasted from the age of 27 to 58, with both labor income and livelihood surplus maxing out at the age of 45.
In 2019, the life cycle deficit amounted to a total of 132.9 trillion won (US$111 billion). That figure is found by subtracting labor income (969.8 trillion won) from spending (1.1 quadrillion won) over the life cycle. Labor income (4.9%) increased more than spending (4.6%) year over year. Among different categories of labor income, wage income rose 5.4%, to 928.06 trillion, while labor income among the self-employed decreased 6.0%, to 41.77 trillion won.
By age group, the working age population (aged 15 to 64) had a net outflow of 131.7 trillion won because labor income earners are the ones who shoulder the burden of taxes and contributions to social security programs. Children (aged 14 and below) and the elderly (aged 65 and above) had a net inflow of 147.5 trillion won and 117.1 trillion won, respectively, given the child subsidies, educational services, and basic pension they receive.
Private sector transfers, including gifts and inheritance, amounted to a net outflow of 99.9 trillion for the working age population and a net inflow of 77.5 trillion won for children and 16.5 trillion won for the elderly. Private sector transfers to children (77.5 trillion won) were greater than public sector transfers (71.3 trillion won).
In contrast, the elderly received more in public sector transfers (76.1 trillion won) than in private sector transfers (16.5 trillion won). That’s because government welfare programs play a bigger role in elder care than families and the private sector, Statistics Korea explained.
By Lee Jeong-hun, staff reporter
Please direct questions or comments to [english@hani.co.kr]
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