Anchor: Elderly South Koreans have been found to suffer from larger debt burdens than the elderly in key advanced countries. The phenomenon resulted after many South Korean seniors came into debt to pay for their children's education and weddings, but didn't prepare for old age with savings or pensions.
Our Bae Joo-yon has more.
 
Report: A state-run think tank says South Korean seniors are more vulnerable to household debt than their counterparts in other major countries.
 
According to the Korea Development Institute (KDI) on Wednesday, the household debt to income ratio in 2014 was 161 percent for South Koreans aged 60 or more, which is higher than the 128 percent average for people of all ages.
 
In 15 advanced countries, including the United States and Germany, the ratio was lower for those aged 60 or more, compared to the overall average.
 
Stable sources of income such as personal pension accounted for only 29 percent of South Korean seniors' total income. The ratio was more than 70 percent for the Netherlands and Germany, signifying that South Korea's elderly are less capable of repaying debt.
 
Meanwhile, household debt accounted for 74 percent of financial assets such as savings compared with between ten and 50 percent for advanced countries. This means Korean seniors are more vulnerable to economic changes such as a recession or interest rate hikes.
 
The KDI said many South Korean elderly came into debt to pay for their children's education and weddings, but didn't prepare for old age with savings or pensions.
 
It said the contract period for home mortgage loans is relatively short in South Korea. In addition, the ratio of people with deferment programs, where borrowers are allowed to pay only interest for a set period and the principal later, is quite high which means the debt burden increases as people age.
 
As a result, the institute said the government should increase the ratio of installment loans so that debt holders repay interest and principal at the same time in installments.
 
The KDI also proposed that the government raise the liquidity of real estate assets by offering more reverse mortgages to lower the debt burden of households.
Bae Joo-yon, KBS World Radio News.