Why Older Koreans Keep Working Longer Than Their Peers in the OECD

Why so many seniors in Korea are still on the job

Kim Eun-hui spent three decades in a company before accepting voluntary retirement at 57. She now scans neighborhood job boards and online listings for part time work that will help her pay bills while her two sons finish college. After years of steady employment, the search has been sobering. Kim explained that she felt boxed in by age, wages, and limited openings for people in their late fifties.

After describing what happened at her final workplace, she summed up her choices bluntly.

“If I had declined the early exit package, they would have fired me anyway. I tried to find another stable job, but given my age, it was not easy.”

Her plan is to keep working for at least five more years. Even that feels uncertain. Kim said the burden of tuition, rent, and daily expenses leaves little room to pause.

“I did not realize how harsh the employment reality is. I understand why so many people start small businesses even without experience.”

Her story reflects a broader pattern. Korea records the highest employment rate among people aged 65 and older in the developed world. In 2023, 37.3 percent of Koreans in that age group were still working, compared with an OECD average of 13.6 percent and 25.3 percent in Japan. Korea entered the super aged category in 2025, with 20.3 percent of the population aged 65 or older. That share is projected to exceed 40 percent by 2050. Many older people report that they want to stay employed to about 73.4, but for most it is not a lifestyle choice. In surveys, 54.4 percent of older workers say they keep working to cover living costs. Only a minority cite enjoyment or avoiding boredom.

From preference to necessity

The high rate of senior employment is the product of two powerful forces that meet in the middle of many working lives: early exit from main jobs and modest pensions that start later. The result is a long income gap between a worker’s last steady paycheck and the first pension deposit. Many seniors bridge that gap through part time roles, daily contract work, and small family businesses, even when those roles have little connection to their previous careers.

How early retirement and late pensions created an income gap

Korea’s legal retirement age is 60, but the average age at which people leave their main jobs is 52.9 as of 2025. Pension eligibility is moving in the opposite direction. People born between 1961 and 1964 start at 63. Those born in 1969 or later start at 65. That timeline creates an extended stretch of years when many households need earnings but have lost the stability of main career jobs. The common response is to accept low wage roles, piece together part time shifts, or open small businesses with limited savings.

Corporate pay practices push in the same direction. Many companies use seniority based pay and promotion, a system that ties wages to years of service rather than to the specific job or performance. As tenure advances, pay bills rise. Employers often cut costs by encouraging workers in their fifties to accept early retirement. The International Monetary Fund (IMF), in an assessment of Korea’s labor market, called these rigidities a driver of premature exit from stable employment.

“Structural labor market rigidities in Korea, namely the seniority based wage and promotion systems, lead to premature retirement.”

Age based rules and practices then shape what comes next. The law permits mandatory retirement at 60 or older. Many workplaces also adopt peak wage schemes that reduce pay in the years before retirement. Rights groups say these policies push older workers into lower paid, precarious jobs that are often unrelated to their experience. The emotional toll can be heavy. As one 52 year old attorney quoted in a rights report put it:

“It is an infringement of human dignity. Just because I am older, I cannot work where I worked my entire life.”

Pension math: what benefits cover and what they do not

Public pensions help, but for many households they do not cover the basics. The average monthly National Pension benefit in 2024 was about 660,000 won (around 450 dollars). Korea’s government estimates the minimum monthly cost of living for a single person at 1.34 million won. That gap explains why so many people keep working even after they start receiving benefits. Korea has expanded pension coverage since the 2000s and has made special efforts to reach people who were not covered during their working years. The share of seniors with no pension income fell from nearly 69 percent in 2006 to 8.7 percent in 2022. Even so, Korea’s senior poverty rate remains the highest in the OECD, at 40.4 percent in 2023. Women and those over 75 face the greatest hardship. Only 32.4 percent of senior women received National Pension benefits in 2022, compared with 56.9 percent of men. Poverty among senior women reached 48.7 percent, and among people 75 and older it reached 61.3 percent.

Evidence shows that non contributory benefits can reduce hardship without pulling people out of the labor market. Studies of Korea’s Basic Pension expansions since 2014 found a meaningful reduction in old age poverty, especially at the very bottom, and little sign that recipients stopped working as a result. Some families reduced private transfers to parents, but the net effect was greater income security for older people and less financial strain on adult children.

Incentives inside the pension system also shape behavior. Korea offers a deferment option that raises benefits by 7.2 percent for each year someone delays the start of their National Pension. Many older people who can find work choose to defer and aim for a higher monthly payment later. There is also an earnings test that reduces old age pension benefits for people with higher current earnings. That reduction can reach 50 percent for those above the threshold, though it mainly affects better paid workers. For many seniors who need cash now, taking a job still makes sense despite a temporary reduction in benefits.

Family support is fading

Older Koreans have long relied on children for support in old age, but that safety valve is narrowing. Research using the Korean Longitudinal Study of Ageing shows that transfers from children remain meaningful at retirement, yet the strength of that support is weakening as family size shrinks and as younger adults face their own economic pressures. Low fertility and rising life expectancy mean more years to finance with fewer working age family members able to help. That demographic shift increases the importance of both adequate pensions and access to suitable work.

Job quality and the career disconnect

The jobs most available to seniors often pay less, offer little security, and demand physical stamina. Public data and budget office analyses point to a pattern. About 61 percent of older wage earners are in non regular positions. Nearly half work at very small businesses, with 49.4 percent employed at firms with fewer than 10 employees. Work is frequently low skill and manual: 35.4 percent of older workers are in elementary occupations and about 15 percent operate machinery. More than half, 53.2 percent, say their new jobs have little or no connection to the careers they built before leaving their main employer. The pay gap is stark. Workers in their late fifties earn around 3.51 million won a month on average. In their early sixties, often in reemployment after retirement, average pay falls to about 2.79 million won, a drop of roughly 20.5 percent.

This disconnect wastes human capital and weakens household finances just when living costs and health needs often rise. Better matching between skills and roles, more training geared to older learners, and stronger measures against age discrimination would help more seniors stay in relevant positions longer. For employers, that also means redesigning roles to reduce heavy lifting, supporting part time transitions, and valuing mentoring and client facing experience that older staff can offer.

Longer working lives need better work

As more people stay employed into their late sixties and seventies, the quality of that work matters. Age friendly job design, predictable schedules, access to health services, and fair pay structures can reduce turnover and physical strain. Stronger enforcement of equal treatment regardless of age and transparent promotion criteria would also make it easier for experienced workers to stay in the roles where they add the most value.

What policy makers propose now

Pressure for reform is growing. The IMF has urged Korea to raise the retirement age and to replace seniority based pay with job based compensation that aligns wages with roles and performance. The aim is to keep older workers in stable positions without turning them into a growing cost liability for employers. International comparisons point to room for change. Korea’s statutory retirement age is lower than in many OECD countries. The IMF also notes that Korea’s pension eligibility age is among the lowest in the OECD. OECD analysis estimates that moving the pensionable age to 68 by 2035 could lift total employment by 14 percent and raise GDP by 12 percent by 2070.

Domestic policy debates focus on three fronts. First, make pay systems more job based so that companies do not see late career staff only as cost centers. Second, broaden the social safety net to cover more non standard workers by expanding employment insurance, improving benefit access, and using tools like the Earned Income Tax Credit to support low wage work. Third, strengthen the old age safety net by improving the adequacy and sustainability of the National Pension and by targeting the Basic Pension more effectively at the most vulnerable, including many women and people over 75. Health and long term care reforms matter too, since chronic conditions often determine whether someone can keep working.

Companies have a role. Japan requires employers to secure employment opportunities for older people up to age 70, either within the company or through other arrangements. Korean firms and regulators are discussing how to extend working lives in ways that fit different industries and occupations. Office roles may adapt more easily than physically demanding jobs. Any move to lengthen careers works best when paired with training, job redesign, and clear protections for workers whose health or job type makes extended service unrealistic.

How incentives shape when people retire

Economists studying Korea find that older workers respond strongly to the forward looking incentives built into pensions and wages. Additional earnings and the promise of higher future benefits from delaying pension take up reduce the likelihood of immediate retirement. In contrast, the level of pension wealth alone, held constant for other factors, is a weaker predictor of when someone leaves the labor market. That pattern helps explain why raising the return to continued work, and making it feasible to stay in good roles, can be powerful.

Private family support still matters at retirement, but shrinking family size means it cannot carry the load on its own. That is why coordination across retirement rules, pension design, employment practices, and health care is becoming urgent. One researcher at the National Pension Research Institute summarized the challenge.

“Older adults’ quality of life cannot be improved if retirement, pension and employment policies continue to function in isolation. A coordinated overhaul is needed to reduce friction between these systems.”

Voices from the workforce

For people like Kim Eun-hui, the policies on paper are measured one job posting at a time. She keeps an eye out for work near home that pays just enough and offers steady hours. Many of her peers look to small franchises, delivery routes, or school safety posts and civic service roles. The aim is simple: maintain income long enough to support family goals and qualify for a higher pension later. In national surveys, older people often say they will keep working to around 73.4 if health permits and if the work is doable.

Kim reflected on why so many of her friends now talk about starting simple businesses or taking shifts that younger job seekers might pass over.

“I understand why people open small shops or take part time shifts. You do what you can until the pension starts, and even then you may still need the extra income.”

Her words capture the tightrope many seniors walk. Reforms that improve job quality, align pay with roles, and bolster basic income in old age would not only reduce hardship. They would also help Korea use the experience of its older citizens in ways that benefit households and the wider economy.

What to Know

• Korea has the highest employment rate for people 65 and older in the OECD at 37.3 percent in 2023, far above the OECD average of 13.6 percent.
• Most older Koreans work to cover living costs, and many say they aim to remain employed until about 73.4.
• The average main job exit age is 52.9, while pension eligibility begins at 63 to 65 depending on birth year, creating a long income gap.
• The average National Pension benefit is about 660,000 won a month, below the minimum monthly cost of living for a single person of 1.34 million won.
• Senior poverty remains the highest in the OECD at 40.4 percent, with women and those over 75 facing the greatest risk.
• Many older workers are in non regular, low paid, physically demanding jobs, often unrelated to their prior careers.
• The IMF urges raising the retirement age and shifting to job based pay systems. OECD estimates that raising the pensionable age to 68 by 2035 could lift employment and GDP in the long run.
• Studies show Basic Pension expansions reduced old age poverty without pulling seniors out of the labor market.
• Pension deferment raises benefits by 7.2 percent per year of delay, encouraging some seniors to keep working longer.
• Experts call for coordinated reforms across retirement rules, pension design, employment practices, and health care to support longer, better working lives.