Retirement Age and Housing Consumption: The Case of South Korea

Chunil Kim, Hyobi Choi and Yeol Choi
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Chunil Kim: Housing Urban Finance Institute, Korea Housing and Urban Guarantee Corporation (KHUG), Busan 48400, Korea
Hyobi Choi: Busan Development Institute, Busan 47210, Korea
Yeol Choi: Department of Urban Planning and Engineering, Colleague of Engineering, Pusan National University, Busan 46241, Korea

Sustainability, 2021, vol. 13, issue 3, 1-21

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.

Keywords: retirement; housing downsizing; housing consumption; housing tenure choice (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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