ED Prepare for era of extreme aging

Korea is on course to have the world’s oldest population by 2060, overtaking Japan. The projection is more than a demographic curiosity. It is a warning that one of the world’s most advanced economies is approaching an unprecedented test of its pension, health care, labor and fiscal systems.

According to a 2025 report from the U.S. Census Bureau, the share of Korea’s population aged 65 and over is projected to rise from 20.3 percent last year to 41 percent in 2060, the highest in the world. The proportion aged 80 and above is expected to nearly quadruple, from 4.8 percent to 18.3 percent. Even more striking, the old-age dependency ratio is projected to jump from 29.5 elderly people for every 100 working-age adults to 81.6. In practical terms, fewer than two workers will be supporting each older person.

This is not simply a welfare challenge. It threatens economic growth itself. The era in which a large working-age population provided a demographic dividend is ending. Korea is entering an era of demographic drag, in which a shrinking labor force, rising dependency and growing demand for public services will weigh increasingly on productivity and public finances.

The country’s already-high elderly poverty rate makes the problem more acute. At 40.5 percent in 2020, Korea had the highest old-age poverty rate among OECD members. The late introduction of the national pension system, limited benefit coverage, inadequate replacement rates and a seniority-based wage structure that encourages early retirement have all contributed. Meanwhile, longer life expectancy is increasing demand for medical and long-term care. The government estimates that more than one in 10 Koreans aged 65 or older could have dementia by 2040, placing additional pressure on health and care budgets.

Successive governments have spent hundreds of trillions of won addressing low birthrates and population aging. Cash allowances, expanded parental leave and housing support for young couples have all grown. Yet these measures have done little to alter the structural conditions discouraging marriage and childbirth: prohibitively high housing costs, intense educational competition, expensive private tutoring and insecure employment.

The recent uptick in the total fertility rate is encouraging, but it should not invite complacency. Demographic trends have long lags. Even a sustained recovery in births would take decades to translate into a larger workforce. Korea therefore has to pursue two strategies simultaneously: remove the structural barriers to having children while preparing for an aging society that is already inevitable.

That means shifting from subsidies to structural reform. Young people need affordable housing, stable jobs and realistic ways to balance work and family life. Education policy must address the intense competition for university credentials and the enormous burden of private tutoring. Family policy should also recognize changing social realities by extending meaningful support to diverse family arrangements, including unmarried couples.

At the same time, Korea must make better use of the workers it will have. Raising the effective retirement age, expanding post-retirement employment, reforming seniority-based pay and increasing women’s labor force participation should be priorities. Carefully managed immigration will also become increasingly important.

Pension reform cannot be postponed. Nor can the redesign of health, long-term care and other social programs around the realities of a super-aged society. Raising the age threshold for some senior benefits may warrant consideration as life expectancy rises, but such changes must not become a pretext for shifting costs onto an already vulnerable elderly population. With elderly poverty so high, reform must balance fiscal sustainability with adequate protection.

Above all, demographic policy requires political courage and continuity. Population decline is a decadeslong challenge that cannot be managed within the electoral cycle. Korea’s failure to respond quickly enough when fertility first began to fall should serve as a lesson: delay is itself a policy choice, and an expensive one.

The country cannot stop demographic aging. It can, however, determine whether the transition becomes a national crisis or a manageable transformation. That will require coordinated reforms in pensions, taxation, education, housing, labor and welfare — and, above all, a political consensus strong enough to outlast individual governments.