Family Home Accounts for 75% of Elderly Households’ Total Assets
- Date 2018-12-18
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Family Home Accounts for 75% of Elderly Households’ Total Assets
- 80% of elderly households wish to stay in their current home
- The percentage of the elderly willing to recommend JTYK to others went up from last year
- One out of every five senior households carry debts
- The share of elderly people prepared for retirement has dropped
A recent study revealed that, on average, the family home accounts of 75% of the total assets of households headed by persons aged 60-84 and that the share of these households carrying jeonse loans or mortgages amounts to 21%. The study also found that the percentage of senior citizens prepared for retirement dropped this year compared to the previous year. In addition, the share of senior households on JooTaekYeonKeum (JTYK) willing to recommend JTYK to others went up from the previous year.
* JooTaekYeonKeum (JTYK) is a state-guaranteed reverse mortgage loan in which senior citizens 60 years of age or older provide their owned home as collateral and receive living expenses for their post-retirement life in the form of monthly pension benefits either for the rest of their life or for a certain period of time.
Korea Housing Finance Corporation (HF, CEO Lee Jung-Hwan) stated on December 18, 2018, that these are the results of the JTYK Demand Survey that it conducted to gain a better understanding of senior citizens’ retirement life. The survey was conducted from July 18 to September 5, 2018, on 3,000 general home-owning households headed by persons aged 55-84 and 1,200 home-owning households on JTYK in the same age category.
* The 1,200 households include 600 households on JTYK for two years (those that subscribed to the reverse mortgage loan between July 2016 and June 2017) and 600 households on JTYK for three years or more (those that subscribed the JTYK scheme between July 2007 and June 2016).
□ The family home accounts for 75% of elderly households’ total assets
According to the survey, on average, the family home accounts to 75.1% of the total assets of general households headed by persons aged 60-84. In particular, the proportion of the value of the primary home to the households' total assets goes up for senior households in Seoul (85.2%) and Gyeonggi Province (81.6%), compared to those in local areas (64.4%). More notably, for senior households having recently joined JTYK for two years, the number stood at a whopping 92.1%.
Of general senior households headed by persons aged 60-84, 21.0% of them are found to carry jeonse loans or mortgage loans. The number goes up in the lower age brackets. Furthermore, 50.9% of households owning a home worth KRW 900 million or more responded that they have debts.
More specifically, the median amount of their debts stood at KRW 98.28 million, or 25.2% the value of their home on average. Among the home loans, the share of mortgage loans accounts for 10.3% of them with an average outstanding loan amount of KRW 85.93 million. Households with an outstanding loan amount of KRW 100 million or more account for 38.9% of the total households in debt.
□ The share of the elderly prepared for retirement decreases
It was also found in the survey that the share of elderly people prepared for their retirement dropped compared to the previous year. Among the general senior households, the percentage of ‘not-retired’ households prepared for retirement stood at 51.3%, a 3.1%p drop from a year earlier.
In addition to retirement preparedness, the percentage of senior households financially assisted by their children among the 3,000 general senior households surveyed amounts to 22.5%, down 3.7%p from the previous year. Among elderly households on JTYK for two years, 23.8% of them are found to receive financial assistance from their children, a lower figure than that of a year earlier.
In addition, earned income and business income are found to be the major income sources of senior households, accounting for 51.6% of their total income. Pensions account for 30.4% of their total income, but this is mostly from public pensions. For households expecting retirement (headed by persons aged 55-59), earned income and business income make up most (89.3%) of their total monthly income, and pensions account for a meager 4.3% of the total.
□ More senior households on JTYK willing to recommend JTYK to others
Asked whether they are willing to recommend JTYK to others, 71.2% of the senior households on JTYK responded positively, a 6.9%p increase from the previous year.
Of the general senior households, 28.5% said that they are not willing to pass on their home to their children, and the percentage of such households has been on a steady rise since 2015. Furthermore, among these households, 33.8% said that their JTYK subscription is not likely to have a negative impact on their relationship with their children. This figure also has shown a steady decline since 2016.
Among senior JTYK-using households with children, 78.8% of them responded that their children regard JTYK subscription positively.
□ 80% of senior households wish to stay in their current home
Regarding aging in place (AIP)*, most (80.1%) senior households headed by persons aged 60-84 and living in their home responded that they want to continue to stay in their home. Among these households willing to age in place, most, or 78.0%, wish to stay in their current home. Of these, 2.1% said that they are willing to age in the same community, though not in their own home.
* Aging In Place means that senior citizens age in familiar places or surroundings, maintaining their existing relationships as long as possible.
These older adults who prefer to age in their own home or in their community said that they prefer AIP because of psychological and economic factors. For psychological reasons, they mentioned the ease of living in familiar surroundings and the burden of adjusting to new surroundings. They also said that staying in their current residence can help minimize housing costs. And over half of them commented that in order to age in place, they need a home-based ‘financial product which can help secure a stream of income for their retirement years.’