“Someday, I’ll Live Alone”… Preparing for Old Age as a Single-Person Household

https://www.viva100.com/article/20250513501617

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◇ Preparing Living Expenses with a ‘Three-Story Pension’

Single-person households face a heavy economic burden because they must cover all living expenses, including housing, on their own. Since it is difficult to expect support from family, pensions that can replace a salary are crucial to covering basic necessities like food, clothing, and shelter after retirement. Therefore, while still economically active, one should steadily prepare a ‘three-story pension’ consisting of the National Pension, retirement pension, and private pension.

For example, suppose an office worker contributes 9% of their monthly salary to the National Pension and saves one month's salary annually in a retirement pension. Adding a savings of 5-10% of monthly income into a private pension can ensure a more stable retirement.

Many employees are aware of the year-end tax benefits of private pension contributions, but they often overlook the fact that these pensions become vital living funds after retirement. However, consistently contributing to private pensions, such as an Individual Retirement Pension (IRP), from a young age provides not only tax benefits but also significant help in securing retirement funds. By using the National Pension for basic living expenses, the retirement pension to cover the income gap period, and a private pension for a more comfortable lifestyle, single-person households can also enjoy a stable and affluent old age.

◇ Generating ‘Earned Income’ Through Consistent Self-Care

Even those living alone can live without much difficulty as long as they are economically stable and healthy. However, various problems can arise if economic difficulties occur or health deteriorates. In particular, if the three-story pension is insufficient for living expenses, a situation may arise where one must work to make up the difference.

According to a survey by Statistics Korea, 69.4% of seniors aged 55 to 79 in 2024 responded that they want to continue working. Among them, 55% answered that it was ‘to help with living expenses.’ This shows that managing one's career and health to earn income is important for securing living expenses in preparation for a potentially long old age.

In a low-interest era like today, the lower the interest rate, the less the value of savings and the higher the value of work. For example, earning 2 million won per month through re-employment is similar to the interest income earned from a 1 billion won deposit when the savings interest rate is 2.5%. Furthermore, working goes beyond simply making money; it provides a sense of fulfillment in life and greatly helps in maintaining physical and mental health.

◇ ‘Housing Stability’ is Crucial for Single-Person Households

Because the burden of housing costs, such as monthly rent, is high for single-person households, housing stability is more important for them than for multi-person households. In reality, single-person households have a higher rate of renting compared to all households and often reside in small homes like studio apartments. Since they must bear the housing costs alone, the economic burden feels greater. Especially in large cities, high rents and living costs can further increase the burden on single-person households.

Looking at homeownership rates by age for single-person households, those in their 70s are the highest at 49.4%, followed by those in their 60s at 43.4% and those in their 50s at 37.6%. The average homeownership rate for single-person households is 31.3%, which is barely half of the homeownership rate for all households (56.4%). The gap in homeownership is most significant in the 50s, with a difference of 27 percentage points (P).

As such, since single-person households may have relatively fewer opportunities to earn income, securing housing stability through homeownership is very important. Owning a home also allows one to supplement their economic power in old age by utilizing systems like the Home Pension (Reverse Mortgage).

◇ ‘Hobbies and Community’ to Replace Family are Essential

It is said that in old age, loneliness can be a greater threat than economic hardship. Especially for single-person households, it is advisable to participate in activities such as hobby clubs to establish alternative communities that can replace family.

According to statistics, 44.3% of seniors aged 60 and older in Korea want to spend their retirement engaging in hobby activities. This is followed by travel/tourism at 23.4% and income-generating activities at 12.3%. Men showed a relatively higher preference for hobby and income-generating activities, while women showed a higher preference for religious activities, travel/tourism, and family care activities.

According to a 2023 survey, the most satisfying leisure activity for single-person households was watching TV at 30.6%, followed by walking/strolling (28.8%) and meeting friends (18.5%). In particular, the proportion of TV watching tended to increase with age. For single-person households, who may feel more loneliness in old age compared to multi-person households, it is important to proactively create and participate in networks such as hobby activities or community gatherings to replace family.

◇ Preparing Medical and Nursing Expenses in Advance

One of the most important factors determining the quality of life in old age is health. Especially for elderly single-person households, living healthily is more important than simply living long. Single-person households often experience economic hardship due to sudden and large medical expenses rather than general living costs. Since it is difficult to receive direct help from family, preparing medical and nursing expenses in advance is essential.

The related concept of ‘healthy life expectancy’ refers to the period during which one can live a healthy daily life, excluding the period spent suffering from illness from the average life expectancy. According to research, after age 65, Korean men spend about 14.8 years and women about 19 years living with illness. As of 2022, the annual out-of-pocket medical expense per person for seniors aged 65 and older was 1,236,000 won, which is about 2.4 times the overall average (513,000 won).

To ensure a stable retirement, single-person households should prepare medical funds in advance and sign up for health-related insurance, such as indemnity insurance, to reduce the burden. Above all, it must be remembered that preventing disease through consistent health management is the most effective way for single-person households to save on medical costs.

◇ Anyone Can Become a Single-Person Household

We live in an era where the possibility of facing old age alone has increased for everyone due to changes in household structures and population aging. While policy support and social consideration are essential to ensure single-person households have a stable retirement, there are limits to government or social support alone. If an individual fails to prepare economically or take care of their health, they may face great difficulties in old age. Therefore, the effort to prepare oneself in advance is more important than anything else.

It is necessary to prepare retirement living expenses by actively utilizing the three-story pension (National, retirement, and private pensions) and to reduce economic anxiety by securing a stable housing environment. Health management is also extremely important. No matter how well one prepares economically, all efforts can lose their luster if health does not support it. Only through efforts toward economic independence, health management, and maintaining social networks can a single-person household welcome a stable retirement.

Source = Kang Eun-young, Research Fellow, 100-Year Life Research Institute, NH Investment & Securities

Compiled by = Reporter Yeom Jae-in yji@viva100.com

I was searching for retirement prep and found this old article, but it's so well-organized that I brought it here to share with you guys.

How are you guys preparing for retirement?

Source: https://theqoo.net/hot/4192973451