2025 Complete Retirement Planning Guide: Preparation Strategies
2025-01-10
1. Calculating Retirement Funds
Post-retirement living expenses are typically 70-80% of current expenses. Monthly expenses 3M KRW ร 0.7 = 2.1M KRW. Total needed for 30-year retirement: 2.1M ร 12 months ร 30 years = about 750M KRW. Additionally consider inflation (2-3% annually), medical costs, and leisure expenses.
2. Utilizing National Pension
National Pension is the basic retirement income source. Average monthly benefit is 600K-1M KRW (varies by contribution period and income). Delaying receipt by 5 years increases benefits by 7.2% annually (max 36%). Maximize contribution period (minimum 10 years required), use voluntary subscription and retroactive payment systems. Important for both spouses to secure their own pensions.
3. Private and Retirement Pensions
Private pension (Pension savings): Tax credit up to 990K KRW within annual 6M KRW limit. Retirement pension (IRP, DC, DB): Company contributions, IRP allows additional contributions (tax credit up to 1.485M KRW). Combined pension savings + IRP tax credit limit is 9M KRW annually. Contribute consistently long-term and receive as pension after age 55.
4. Asset Allocation Strategy
Lifecycle asset allocation: 30-40s: Aggressive investment (stocks 60-70%, bonds 30-40%). 50s: Balanced investment (stocks 50%, bonds 50%). 60s+: Stable investment (stocks 30-40%, bonds/deposits 60-70%). Reduce risk through diversification and rebalance regularly.
5. Debt Management and Housing Plan
Ideally repay all debt before retirement. Prioritize high-interest loans (credit loans, card loans). Housing: โ Owning home reduces housing costs. โก Reverse mortgage (age 55+, home โค900M KRW) provides monthly pension. โข Downsizing (largeโsmall home) to secure funds.
6. Post-retirement Income Generation
โ Part-time work: Leverage expertise (consulting, teaching). โก Entrepreneurship: Small franchise, online business. โข Rental income: Real estate rental. โฃ Dividend investing: Stable dividend stocks. โค Hobby monetization: Craft sales, blog operation. Important to prepare and gain experience before retirement.