"Even with 410 Million Won in Assets, You May Not Be Middle Class"... The Six True Conditions of the Middle Class [Weekend Money]

NH Investment & Securities' "Real Middle Class" Analysis Report

"Must Be Able to Maintain Current Standard of Living in the Future"

AI-generated image based on materials from NH Investment & Securities

An analysis has concluded that the true middle class in Korea consists of people who have approximately 410 million won in net assets and are able to maintain their current reasonable standard of living into the future.

The middle class must have reasonable assets and be able to sustain their current standard of living in the future

On September 24, the 100-Year Life Research Institute at NH Investment & Securities pointed out in its report, "The Real Middle Class in Korea," that simply defining Korea’s middle class by their income or asset size has limitations. Instead, the essence of the middle class lies in "actually enjoying a reasonable current standard of living and being able to sustain that lifestyle into the future," the report emphasized.

The research institute stated that, to be included in the real middle class, households must meet at least five out of six conditions. First, disposable income should be between 75% and 200% of the median value, which is 37.44 million won. Second, annual consumption expenditure should be at least 15.67 million won, which is 75% or more of the weighted median personal consumption. Third, after consumption, more than 10% of disposable income must be left as savings. After meeting all three of these criteria, a household must also meet at least two out of three additional criteria related to the sustainability of their future—assets, liabilities, and retirement readiness—to be considered truly middle class.

When the criteria were applied sequentially, the scope of the middle class narrowed significantly. Using income as the sole criterion on a household basis, 52.9% of all households in Korea fell into the income middle class. When a minimum standard of consumption consistent with the middle class was added, this dropped to 43.2%. When the ability to save more than 10% of their income while spending was added, the proportion fell to 39.9%. Finally, when at least two qualifications among asset security, debt stability, and retirement preparation were added, only 24.6% of all households remained.

Only about one in four households qualify as truly middle class

This means that, although more than one in two households in Korea earn a median level of income, only about one in four are able to support an adequate standard of consumption, maintain savings, and secure economic safety nets for the future. The portion of households meeting all six conditions stood at just 8%.

Among all Korean households, the median net assets of the real middle class, as analyzed by the research institute, were 417.05 million won—almost 200 million won higher than the overall median of 238.6 million won. The median financial assets for all households were 63.12 million won, but this climbed to 112.3 million won among the true middle class. The home ownership rate among the true middle class reached 72.5%.

Kim Jinwoong, research fellow at the 100-Year Life Research Institute and author of the report, explained, "The true middle class is not simply defined by owning an expensive home, but more by being a household that has not only a stable residential base but is also sufficiently accumulating financial assets that can be actually used."

Kim went on to say, "If we look solely at income, more than half of all households fall into the middle class, but only around one in four manage to enjoy a reasonable standard of living, save money, and fulfill requirements regarding assets, debts, and retirement preparation." He emphasized that, "From a life-cycle perspective—living a stable life from birth to death—the definition of the middle class should shift from 'how much you earn' to 'how well you live and how long you can sustain that life.'"

This content was produced with the assistance of AI translation services.