In December 2024, South Korea witnessed for the first time that the share of the population aged 65 and older surpassed 20 percent, being recognized as an "aging society." It is projected that by August 2026, this share will reach 22.1 percent. This situation not only signifies demographic progress but also brings new challenges for society.
Challenges of Rapid Population Aging
Population aging is not a problem in itself; rather, the main concern is the speed of this process and the readiness of society to face it. South Korea has transitioned from an aging society to an aging society in about 24 years, a process that has been much faster than in Japan. It is expected that by 2060, about 41 percent of South Korea's population will be 65 years or older, which will put additional pressure on retirement, health, and care systems.
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Economic and Social Consequences
The pension system in South Korea is largely dependent on the National Pension Fund, which is financed by contributions from workers, employers, and the self-employed. However, this fund is expected to be depleted by 2054. Additionally, the poverty rate among the elderly has reached 39.7 percent, the highest rate among OECD countries.
Considering that many elderly individuals have high assets but low cash income, they have turned to reverse mortgages and combined them with basic pensions. Furthermore, the employment rate among the elderly in South Korea is significantly high, and the average age of leaving the labor market is higher than in other OECD countries. Therefore, discussions are ongoing about raising the retirement age from 60 to 65 years.
Another challenge for South Korea is healthcare. With increasing demand for long-term care services, existing programs in this area need improvement. For example, in 2024, 10.8 percent of individuals aged 65 and older were approved for services, and this percentage is expected to rise.
Ultimately, South Korea's experience can provide valuable lessons for other aging countries. This country faces economic and social challenges due to its aging population, and the choices it makes in this regard could serve as a model for other nations.
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