What do we need for era of centenarians?

By Kim Da-ye



Investment


The scene of Greek pensioners protesting against their government’s austerity measures rang alarm bells here that national pension plans might not last forever.

The National Assembly Budget Office, in fact, forecast in June that Korea’s national pension fund could dry up by 2053.

As uncertainties cast shadows over the future of financial markets, managing wealth has become as important as taking care of health in this time of longer life expectancy.

Financial companies have moved earlier than other businesses to launch initiatives and products for the era of centenarians.

Woori Investment & Securities, a major brokerage house, for instance, opened a Centenarian Research Institute that introduced a comprehensive service called the centenarian account.

The service computes how prepared clients are for their later years into indices that are linked to different guidelines for wealth management. The accounts will be made up of various asset classes to suit the different needs and characters of clients.

Woori has also dispatched to branches a total of 159 consultants who have finished the “Registered Financial Gerontologists” program, an American certification program to help financial professionals specialize in serving older clients.

“The basic value of the centenarian account is medium risk, medium return,” said Kim Jin-woong, an analyst at the research institute. “Investments made through brokerage houses tend to be short-term, but we want these to develop into long-term ones.”

A key financial product that nowadays makes up the account is equity-linked securities (ELS) that pay out profits on a monthly basis, Kim said. The return on investments into ELS is dependent on the performance of the underlying equities.

The securities linked to the stable composite stock exchange index such as the KOSPI are relatively safe while their rate of return tends to be much higher than deposit interest rates.



Housing



The key word for housing in the era of centenarians is downsizing.

It was generally believed that people would move to the outskirts of cities as they age, but as is turns out most prefer to stay in cities closer to medical and cultural facilities.

As their children grow up and move out, many of the middle-aged and the elderly sell their homes, buy a smaller, cheaper place and live off the profits.

People still prefer owning a home, so the growth of the market for reverse mortgages in which elderly homeowners get paid on a monthly basis to turn their homes into securities has been somewhat sluggish in Korea.

Kim Kyu-jung, the research center director of Mirae Asset Real Estate 114, sees new types of housing emerge for the aging population.

An apartment that is designed like a hanok _ a traditional Korean house _ is one example while some new apartments have huge garden-like terraces.

Kim also said large apartments made more convenient for the elderly by letting out rooms will help raise extra monthly income. Rooms have separate entrances, kitchens and toilets, so that multiple households can live within one apartment without disturbing each other.





Education


Upon graduation from college or graduate school, many students might be relieved at the thought that they do not need to revisit bulky, technical textbooks again. Most people live off the knowledge they have accumulated before the age of 30.

At a time when people can survive for up to a century, people will likely be required to study throughout their life, especially after retiring from their first career.

For a while, municipal governments have run programs that train the elderly in basic computer and language skills, but there is a strong need for more practical, sophisticated education.

For instance, the National Institute for Lifelong Education (NILE), set up in 2007, is working on the “4050 New Start Program.”

NILE aims to revitalize lifelong education among baby boomers with universities taking the lead to help the highly educated baby boomers find jobs again, switch careers or open their own business.

NILE proposes universities open their doors to adults and run lifelong education centers that develop programs and courses for the middle-aged.

Another part of the program is hiring those retired from professional jobs in educational institutions such as special-purpose high schools.



Beauty



The aging society is clearly a boon to the beauty industry. Not only do older people want to look younger, the young want to prevent the effects of aging in advance.

Developing skincare products now involves a lot of science and technology.

AmorePacific, Korea’s largest beauty product maker in sales, launched in 2010 a bio-science research center within the research and development institute.

The firm’s medium- and long-term goal for R&D is to combine natural ingredients with cutting-edge bio technology to develop beauty products for Asians. Beans, ginseng and green tea are the three key ingredients while the firm studies skin cells as well as genes.

The coverage isn’t limited to skin.

As both Korean men and women are highly concerned with hair loss, shampoos that prevent it have become highly popular.

AmorePacific’s Oriental medicine shampoo brand Ryu, for instance, has an anti-aging, anti-hair loss line called Jinsangbo. The company says that Jinsangbo delays the aging of hair by strengthening the roots, moisturizing it and soothing the scalp.

The company has also made a foray into the healthcare industry by developing and selling food supplements and high-quality green tea.



Insurance


The insurance industry is an early bird in the era of centenarians.

There are already a plethora of plans that insure against various illnesses including cancers and dementia until the age of 100.

Korea Insurance Development Institute, however, says that it isn’t enough as the society is ageing rapidly. Last December called for insurance firms to extend the coverage to 110-years-olds or even older.

Some companies are proactively introducing insurance plans for centenarians. Hyundai Insurance, for instance, launched Perfect N Comprehensive Insurance that insures subscribers until they reach the age of 110 against death from injury, cancers, stroke and myocardial infarction (heart attacks).

On June 4, the company introduced the Centenarian Nursing Insurance that pays for long-term care services when subscribers can no longer take care of themselves because of illnesses like dementia. The plan makes a one-off payment that ranges from 20 to 100 million won depending on the subscribers’ condition.



Medical needs



As many kinds of illnesses are increasingly being treated and cured, dementia has emerged as the most daunting illness among the elderly.

Between 2005 and 2010, the number of patients for “senile disorders” including dementia, Parkinson’s disease and problems in blood vessels in the brain soared 163 percent. Hospital expenses for such patients rose 271 percent from 1.08 trillion won to 2.93 trillion won, and reimbursements from the National Health Insurance nearly trebled from 850 billion won to 2.31 trillion won.

Among the senile disorders, the number of those suffering from dementia and their medical expenses grew at the fastest speed _ up 312.4 percent and 620.3 percent, respectively.

Regional public health centers are regularly checking those aged 60 years or over for early signs of dementia. The research institute within the National Health Insurance said that the service needs to be extended to people in their 40s and 50s as the age group affected by dementia is getting younger.



Employment


Korean men quit from the job they held for the longest period of time at 55 on average, according to 2010 data from Statistics Korea. The average retirement age of employees at Korea’s large corporations is 57.

But they were engaged in different forms of economic activities until the age of 70 on average as of 2009.

More than 29 percent of those aged 65 or over are working in Korea, compared to 19.4 percent in Japan, 3.9 percent in the U.K. and 2.1 percent in Germany.

The aging society won’t relieve the working elderly from economic activities.

Experts voice that the current average retirement age at 55 should be raised to between 60 and 65.

The retirees are also encouraged to prepare for a second career before retiring from the first one.



Leisure


Compared to other sectors, relatively little importance has been given to the role of the leisure and entertainment industry in the era of centenarians.

The conventional idea about leisure for senior citizens was that they gather at community centers and participate in activities and events joined by local governments.

If retirees have to spend their spare time in such a way for decades, that’s sad.

Yoon So-young, a researcher of Korea Culture and Tourism Institute, said during the government-organized conference in December that people should develop “leisure career” throughout their life, not after retirement and some leisure and cultural activity programs should be designed to encourage the elderly mingle with different age groups.