Abstract
South Korea became an aging society in 2000 and will become a super-aged nation in 2026. The extended life expectancy and earlier retirement make workers’ preparation for retirement more difficult, and that hardship might lead to poorer living conditions after retirement. As annuity payments are, in general, not enough for retirees to maintain their previous standard of living after retirement, retired households would have to liquidate their financial and real assets to cover household expenditures. As housing takes the biggest share of households’ total assets in Korea, it seems to be natural for retirees to downsize their houses. However, there is no consensus in the housing literature on housing downsizing, and the debate is still ongoing. In order to understand whether or not housing downsizing by retirees occurs in Korea, this paper examines the impact of the timing of retirement on housing consumption using an econometric model of housing tenure choice and the consumption for housing. The results show that the early retirement group living in more populated region does not downsize the house, while the timing of retirement is negatively associated with housing consumption for the late retirement group living in the peripheral region.
Highlights
A similar pattern can be observed for the percentages of one-person households and non-apartment houses: They are higher in the non-capital region for both groups
This study provides cross-section evidence that housing consumption by retired households decreases with the age of retirement, supporting the hypothesis of housing downsizing
Our analysis, in terms of housing downsizing, shows different results when we segment the analysis by retirement group and region: Retired households in the capital region and in the early retirement group do not show the downsizing pattern
Summary
Academic Editors: Grazia Napoli and Pierfrancesco De PaolaReceived: 30 September 2020Accepted: 21 January 2021Published: 26 January 2021Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.Licensee MDPI, Basel, Switzerland.Attribution (CC BY) license (https://creativecommons.org/licenses/by/Aging is a global issue. According to the definition of the United Nations, when people aged 65 or older account for 7–14 percent of the population, it is called an aging society; when the proportion is between 14 and 20 percent, it is called an aged society; when it is over 20 percent, it is called a super-aged society. For example, Japan, where aging has been taking place more rapidly, became an aging society in 1970, entered an aged society in 1994, and has been a super-aged society since 2005 [1]. South Korea (hereafter,
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