[PB Notebook] The Transformation of Real Estate Assessed at Over 1.2 Billion Won

Complete Retirement Financial Planning with Hana Financial's My Home Pension
Lee Yunmi, Hana Bank Gold Club
Pyeongchang-dong PB Center Branch Gold PB Manager

Kim, a 75-year-old resident of an apartment in Gangnam, Seoul, starts each day by caring for her husband, who has difficulty getting around. In his younger years, he rose to an executive position at a major corporation and was a dependable source of support for his family. But after his health deteriorated significantly following retirement, he became unable to move around on his own without someone’s help.

Her family can cover basic living expenses with National Pension benefits and retirement pay, but mounting hospital and caregiving costs are putting an increasing strain on their budget. Kim wants to manage somehow without burdening her children, but in reality, it is not easy. She has considered selling the apartment where she lives and moving to a smaller home on the outskirts to raise funds. But the thought of leaving a place where she has lived for decades, along with practical concerns, has only deepened her sighs.

With the average apartment sale price in Seoul now exceeding 1.2 billion won, many people nearing retirement whom we meet in the field, as well as older clients whose retirement assets consist mostly of real estate such as apartments, voice similar concerns: "I still have a decent home, but I don't have enough cash coming in each month and have to worry about living expenses."

In South Korea, 70-80% of the assets held by older people are concentrated in real estate, and the phenomenon of being asset-rich but cash-poor is becoming more pronounced. In particular, interest is growing in a range of financial planning options that can help owners of apartments or detached houses assessed at more than 1.2 billion won (approximately 1.8 billion won at market value) use their real estate to secure a stable stream of income in retirement.

Many of the older clients we meet who hold a large share of their assets in high-value real estate face a shortage of retirement income relative to their longer life expectancy. For affluent individuals who own an apartment or house assessed at more than 1.2 billion won, Hana Financial's My Home Pension can be an alternative, allowing them to receive monthly pension payments while remaining in their home and retaining the right to live there.

Although My Home Pension is a private financial product, it provides lifetime pension payments until both the resident and their spouse have passed away, creating a stable stream of income in retirement. If the home is sold at public auction after the resident's death and the proceeds exceed the amount owed, the surplus is returned to the heirs or other entitled beneficiaries. Conversely, if the pension payments received exceed the home's value when it is sold after the resident's death, the heirs are not asked to repay the difference.

If My Home Pension provides a lifelong stream of income by using the home, any residual assets remaining after the settlement of the Housing Pension can be inherited by a designated beneficiary of the owner's choice. Alternatively, a public-interest or nonprofit organization can be designated as the beneficiary after the owner's death to receive the remaining assets. In the past, people widely believed that "a home is an asset that should be passed on to one's children." But amid an aging population, longer retirements, and the reality that assets are concentrated in real estate, My Home Pension is becoming an effective solution.

If you are struggling to manage retirement because of a lack of cash liquidity despite owning a home, I recommend looking beyond conventional thinking and generating cash flow through My Home Pension while continuing to live in your home, so you can enjoy a more comfortable retirement.

Lee Yunmi, Gold PB Manager, Pyeongchang-dong PB Center Branch, Hana Bank Gold Club

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