[Edaily Reporter Kim Ju-hwan ] The gap in income—the period between mandatory retirement and the start of National Pension benefits—has increased to as long as three years. Analysts say that many people in their 60s who are looking for work to make ends meet are being forced into unstable jobs, such as temporary or day-labor positions, which is exacerbating household deficits.

According to a research report titled “Current Status and Countermeasures for the Income Gap Among Middle-Aged and Older Adults” released on the 2nd by the Korea Institute for Health and Social Affairs, following the 1998 system reform, the age at which National Pension benefits begin is being raised by one year every five years—starting at age 61 in 2013 and reaching age 65 by 2033.

Conversely, the upper age limit for mandatory enrollment in the National Pension System remains at age 59. As a result, as of this year, those born between 1961 and 1964 (with a benefit commencement age of 63) find themselves in an institutional blind spot: for three years—from the statutory retirement age of 60 to age 62—they are unable to either enroll in the National Pension System or receive pension benefits.

With no adequate safety net in place, the burden of making ends meet during this gap has fallen entirely on individuals. The labor force participation rate for those aged 60–64 jumped from 57.0% in 2011 to 66.7% last year, and the proportion of wage earners also rose sharply from 49.4% to 66.2%. This is interpreted as a reflection of the reality that people must continue working to make ends meet until their pensions begin.

The issue lies in job stability. The employment rate during the gap period for those born between 1961 and 1964 (66.5%) fell by 7.3 percentage points (p) compared to the rate before retirement age (73.8%). This appears to be largely due to their departure from stable permanent positions. Among those who found new jobs after turning 60, temporary and daily-wage workers accounted for 61.3%, while regular employees made up only 22.1%. Compared to the 59.0% of those who remained at their previous jobs, job stability is significantly lower.

The livelihoods of retired households were also hit hard. For households experiencing an income gap, earned and business income accounted for 83.0% of total income, indicating an absolute dependence on labor. However, the buffering effect—where a spouse increases economic activity to fill the gap when the head of household is forced out of their primary job—was minimal.

The proportion of households experiencing a sharp drop in income—to less than half of their pre-retirement median income—ranged from 15.6% to 17.2% across different age groups. These households tightened their belts by drastically cutting expenses on dining out, leisure, and clothing to about one-third of the levels of average households; however, 7 out of 10 households (70.2–72.5%) in this vulnerable group were unable to avoid running a deficit.

Existing financial and pension systems also failed to protect vulnerable groups. With more than 70% of middle-aged and older households’ assets tied up in real estate, they lacked immediate access to cash, and it was difficult for them to sell their homes to cover living expenses. Even the early old-age pension—which involves taking a loss by receiving benefits early—was an option available only to long-term contributors, as more than 77% of eligible recipients had been enrolled for 20 years or more.

In fact, while the average monthly pension received during the gap period by households that maintained their income reached 1,918,000 won, vulnerable households whose income fell by half or more received only 527,000 won per month.

The research team recommended introducing a phased extension of the retirement age aligned with the pension eligibility age, implementing a re-employment system for small and medium-sized enterprises, and raising the upper age limit for mandatory National Pension enrollment, starting with workers aged 60 and older who have income. They also emphasized the urgent need to build a comprehensive social safety net, including the introduction of a partial pension system that allows recipients to draw their pensions in installments as needed and the expansion of public bridge jobs.