5060 Age Group Turns to Real Estate Liquidity for Retirement Funds

According to a recent report by Hana Financial Research Institute, individuals aged 50-64 are facing difficulties securing cash flow for retirement

According to a recent report by Hana Financial Research Institute, individuals aged 50-64 are facing difficulties securing cash flow for retirement. As a result, real estate liquidity is becoming a prominent solution. The report highlights the high proportion of real estate assets and the burden of housing loans among this demographic, forecasting an increase in the demand for real estate liquidity to fund retirement.

Hana Financial Research Institute's report on "Asset Management Plans for the Affluent Senior Segment" reveals that individuals aged 50-64 make up about 25% of the population and are expected to maintain a similar proportion over the next decade. As these individuals approach retirement, many are heavily invested in real estate, which poses challenges for cash flow.

The report indicates that the income replacement rate from the National Pension is projected to decrease from 50% in 2008 to 40% by 2028. This decline underscores the growing importance of retirement pensions, but many seniors are not adequately prepared, with a significant percentage lacking sufficient pension coverage. Among the affluent middle-aged respondents with financial assets between 100 million and 1 billion won, 88.7% believe there is a need to design a cash flow plan for retirement.

As real estate assets dominate this age group, liquidity issues are prevalent, and many are burdened by housing loans. The survey shows that 33.9% of respondents aged 50-55 hold housing loans, and 29% of those aged 56-64 also have such loans. Consequently, there is a rising demand for real estate liquidity to generate retirement funds.

However, there is little inclination among these individuals to sell their properties and live with their children. Most from the 5060 age group prefer to live independently, whether alone or with a spouse. As a result, there is a growing need for retirement solutions that ensure stable living arrangements while managing real estate assets. Among homeowners in this age group, 53.8% plan to liquidate their real estate holdings.

The report emphasizes the need for a comprehensive approach to retirement asset management that includes real estate. Researcher Lee Jae-wan from Hana Financial Research Institute states, "The high proportion of real estate in asset portfolios and its perception as a retirement asset necessitate a holistic retirement planning service that goes beyond mere financial products."

As the 50-64 age group increasingly looks to real estate liquidity to secure a stable retirement, the financial industry must adapt by offering comprehensive asset management services that address both real estate and financial assets. This shift highlights the need for a more integrated approach to retirement planning, ensuring that seniors can effectively manage their assets and enjoy a secure and comfortable retirement.