Who counts as 'true middle class' in Korea?

What counts as being “middle class?”

For many, income is the starting — and often the only — point of reference. By the OECD’s measure, 52.9 percent of Korean households fall within the middle-income range.

But Park, 60, who spent more than three decades running a health care technical services business, sees the definition as less straightforward.

“Looking at income alone can make the middle class look like a much broader group. I think you need a more comprehensive, multidimensional assessment. It’s about more than simply being able to afford the essentials,” he said.

Life, he noted, does not end with the basics. There is the standard of living people hope to maintain and, eventually, whether they can afford to live that way in retirement.

“Simply put, if you can do everything you want without having to worry about it, you’re at the top. If you have to weigh your choices but can make them without taking on significant risk, I would call that the middle class. But if making those choices puts you at risk, then I don’t think you can really call yourself middle class,” he said.

In Park’s view, then, the question ultimately comes down to how much room your income leaves for the choices you desire — and whether it can sustain them over the long term. Once that broader definition is applied, Korea’s “true middle class” may look considerably smaller than what headline income figures suggest.

A new report from the 100-Year Life Research Institute at NH Investment & Securities reaches a similar conclusion.

“The essence of the middle class, we believe, lies in whether people are actually able to enjoy an appropriate standard of living today and sustain that standard into the future,” Kim Jin-woong, a research fellow at the institute, wrote in the report.

“We sought to identify the country’s ‘true middle class’ by combining income, spending and savings as indicators of current living conditions with assets, debt and retirement preparedness as measures of future sustainability.”

The result is a far smaller group than the income statistics alone would suggest: just 24.6 percent of Korean households meet the definition.

That group is defined in part by a net worth of between 238.6 million won ($172,500) and 694.32 million won. But Kim cautions that being middle class is not simply a matter of owning a home. Rather, it tends to describe households that have both a stable housing base as well as sufficient non-real estate financial assets they can actually draw on when in need.

The narrowing begins with income. By income alone, 52.9 percent of Korean households qualify as middle class. But the share falls to 43.2 percent when the household must also meet a minimum standard of actual consumption. The report sets that threshold at 15.75 million won a year for a one-person household, reflecting spending on essentials and other aspects of everyday life, including housing, food, education, health care, transportation, culture and leisure.

The bar rises again when households must be able to save at least 10 percent of their income after spending. At that point, 39.9 percent qualify.

The final step adds measures of financial resilience: assets, capacity to repay debt and retirement preparedness, bringing the share down to 24.6 percent.