[비즈한국] During early voting for the presidential election, President Lee Jae-myung voted alongside three young people and remarked, “I hope this election serves as the starting point for South Korea to return to an era of youth.” Emphasizing an ‘era of youth,’ President Lee promised various policies for the younger generation. Key initiatives include the introduction of a ‘Youth Future Savings Account (tentative name)’ to support asset formation for those aged 39 and under, the expansion of customized public housing and rental housing for youth, and the introduction of spot cryptocurrency exchange-traded funds (ETFs).
In reality, households headed by individuals aged 39 and under are evaluated as being in a difficult economic situation compared to older generations, as their asset growth has slowed while their debt ratios have risen rapidly. It is pointed out that because their income levels are low, the burden of principal and interest repayment makes it difficult to build meaningful assets.
President Lee introduced numerous pledges during the election focused on resolving the asset gap for the youth. A prime example is the new ‘Youth Future Savings Account,’ which revives the ‘Youth Tomorrow Chaeum Deduction’ that was discontinued under the Yoon Suk-yeol administration. The Youth Future Savings Account is a system where the government provides a certain percentage of support if young people below a certain income level make monthly savings deposits over a period of 1 to 3 years.
Other prominent pledges include expanding the supply of customized public housing and rental housing to reduce the burden of housing and living costs for youth, as well as increasing rent subsidies for youth households who do not own homes. He also promised to introduce ‘Financial Counseling for All,’ where financial institutions provide free financial consultations to young people. Further plans include introducing spot ETFs for virtual assets, which see high investment from the youth, increasing subsidies for job seekers, and issuing a youth transport pass that allows for unlimited transfers without additional fees.
President Lee introduced a wide array of policies related to asset formation for the youth because the asset situation of this demographic is particularly poor. While the assets of all South Korean households have increased faster than their debts over the past decade, debt for households aged 39 and under has grown twice as fast as their assets. As a result, the asset gap between all households and youth households continues to widen over time.
According to Statistics Korea's Survey on Household Finances and Living Conditions, the average assets of all Korean households grew from 323.24 million won in 2012, when the survey began, to 420.36 million won in 2018. By 2021, the figure surpassed the 500 million won mark at 502.53 million won, and in 2024, it reached 540.22 million won. The average annual asset growth rate from 2012 to 2024 was 4.5%. Meanwhile, the average debt for all households increased from 54.5 million won in 2012 to 91.28 million won in 2024, representing an average annual growth rate of 3.8%.
For households headed by those aged 39 and under, average assets grew from 204.57 million won in 2012 to surpass 300 million won in 2020 at 318.49 million won. However, the asset level in 2024 was recorded at 315.83 million won, remaining stagnant for several years. In particular, the average assets of the youth demographic peaked at 363.33 million won in 2022, but dropped to 336.15 million won in 2023 and 315.83 million won last year, meaning assets decreased by nearly 50 million won in just two years. Consequently, the average annual asset growth rate was 3.8%, which is lower than the rate for all age groups (4.5%).
While assets grew slowly, debt increased rapidly. The average debt for the youth demographic aged 39 and under rose from 38.87 million won in 2012 to 94.25 million won in 2024, marking an average annual growth rate of 7.9%. This is more than double the average annual asset growth rate.
The average assets of youth households aged 39 and under, which stood at 63.2% of the total household average in 2012, had risen to 71.5% by 2020. However, by 2024, it had fallen to 58.5%. This is the lowest level since the survey began in 2012. The asset gap between all households and households aged 39 and under is clearly on an upward trend.
As the youth struggle to build assets, their debt ratios are rising rapidly, leading to a deterioration in their financial conditions. The average debt-to-asset ratio for all households remained stable, fluctuating before returning to 16.9% in 2024, the same level as in 2012. In contrast, the average debt-to-asset ratio for households aged 39 and under surged from 19% in 2012 to 29.8% in 2024.