In fact, if you hastily sign up for a pension product just looking at the tax credit benefits at the time of subscription, you might face difficulties. It is crucial to find the most advantageous product that matches your income situation and retirement plan. From now on, we will provide a guide to choosing personal pension savings for a wise retirement. You must check accurate information and select the pension product that suits you.

Clearly Distinguishing Personal Pension Savings, IRP, and Pension Insurance

Personal pension savings are broadly divided into three categories. The core is pension savings and IRP (Individual Retirement Pension), which focus on tax credit benefits, and pension insurance, which focuses on non-taxable benefits. These three have clearly different purposes and benefits, so choosing the product that suits your situation is key. You should avoid regretting later just because ‘others said it was good.’

• Pension Savings: Anyone can subscribe, and you can receive tax credit benefits of up to 6 million won annually. It has the advantage of more flexible mid-term withdrawals than IRP.
• IRP (Individual Retirement Pension): Combined with pension savings, you can receive tax credits of up to 9 million won annually. It allows for efficient management of retirement funds by linking with severance pay, but the conditions for mid-term withdrawals are stricter than pension savings.
• Pension Insurance: There are no tax credit benefits upon payment, but if maintained for more than 10 years, you can receive non-taxable benefits on insurance gains. This can be advantageous for full-time homemakers with no income or those who desire a large pension income after retirement.

You must clearly understand the characteristics of these three products and figure out which product will give you a ‘good life’ in your retirement plan.

Tax Credit Limits and Rates: How to Utilize Them

The biggest appeal of personal pension savings is the tax credit benefit. Pension savings allow for an annual tax credit of 6 million won, and IRP, combined with pension savings, allows for up to 9 million won. The deduction rate varies depending on the total salary: 16.5% for a total salary of 55 million won or less, and 13.2% for those exceeding it. This tax credit has a direct effect of reducing taxes or increasing refunds during year-end tax adjustments.

And one more thing! You can receive additional tax credit benefits by converting ISA (Individual Savings Account) maturity funds into a pension account. A tax credit of 10% of the converted amount, up to 3 million won, is possible, so if you are using an ISA, you should not miss this benefit. Maximizing tax credit benefits is an important starting point for increasing your retirement assets. You should check right now how to maximize tax credit benefits during year-end tax adjustments.

Personal Pension Savings Product Selection Guide by Investment Tendency

Pension products are not just chosen based on tax benefits. You must choose carefully according to your investment tendency and financial situation. To achieve positive results by exclaiming, “Even better!” you need a strategy that suits you.

• For Employees: It is recommended to first fill up your IRP to maximize severance pay linkage and tax credit limits, and then add pension savings with surplus funds. IRP requires payment with spare money, considering that mid-term withdrawals are difficult.
• For Self-Employed/Freelancers: For self-employed individuals whose income is irregular or who may urgently need a lump sum, pension savings with flexible mid-term withdrawals are advantageous. IRP can be a significant burden as mid-term withdrawals are virtually impossible.
• For Investment Beginners: It is safer to get familiar with various investment products such as ETFs through pension savings funds, and then add an IRP when you have more余裕. IRP often involves products that require direct management, which can be a barrier for beginners.
• For Those in Their 50s Nearing Retirement: You should reduce the proportion of risky assets and rebalance into bond-type or deposit-type products to focus on stable operation. Pension savings can be received after age 55, so it is important to plan the timing and amount of receipt in advance.
• For Spouses Without Income, such as Full-Time Homemakers: Even if it is difficult to directly receive tax credit benefits, it is advisable to utilize the non-taxable benefits of pension insurance or enjoy the tax deferral effect on investment income within the account through pension savings.

You should plan your optimal pension portfolio tailored to your situation right now.

Carefully Compare Fees and Operation Methods

When choosing personal pension savings products, it is as important to carefully compare fees and operation methods as it is to compare tax credit benefits. Especially for IRPs, there are operation management fees and asset management fees, and the fee rates may vary by financial institution, so you must check them. Low fees have a significant impact on long-term returns, so they should never be overlooked.

Pension savings funds can directly invest in various assets such as stock-type, bond-type, mixed-type funds, and ETFs, allowing for high returns, but there is also a possibility of principal loss. On the other hand, pension savings insurance has the advantage of stability with principal and interest guarantees, but the expected return is relatively low. You must sufficiently consider and choose which operation method is more suitable for your investment tendency and target return. You should compare personal pension savings products from various financial institutions and check fees on the Financial Supervisory Service’s financial consumer information portal, FSS Fine.

The sooner you prepare for retirement, the better. By comparing personal pension savings in 2026 and finding the most advantageous product for you, and managing it consistently, you will surely be able to enjoy a secure and happy retirement. You should design and implement your own customized pension portfolio right now.

게시물 Personal Pension Savings Comparison: The Key to Retirement Preparedness in 2026이 솜삽 블로그에 처음 등장했습니다.

Why are people choosing early National Pension withdrawal, even if it means ‘losing money’?

There’s a reason why the number of early withdrawal recipients has increased to such an insane degree. The biggest reason is the ‘income cliff’ problem. The retirement age is getting earlier, but the age to receive the National Pension keeps getting pushed back. For example, people born in 1961 originally expected to receive it from age 62, but in 2023, it was suddenly delayed by another year to age 63. This creates a period of several years with absolutely no income between retirement and receiving the pension, right? This is called the ‘income crevasse,’ and people don’t have the money to get through this gap. With no immediate living expenses, they are forced to apply for early withdrawal, even if it means receiving less. It’s a truly heartbreaking situation.
The burden of health insurance premiums also plays a role. Do you know that from September 2022, the income standard for recognizing health insurance dependents was drastically reduced from 34 million won per year to 20 million won per year? If your monthly pension amount exceeds a certain level, you lose your dependent status under your children and are converted to a regional subscriber, meaning you have to pay health insurance premiums directly. So, many people are now choosing to receive a little less pension to maintain their dependent status. This news completely blew my mind.

Early National Pension Withdrawal: It Can’t Be All Advantages, Can It?

Honestly, getting immediate cash is certainly an advantage of early withdrawal. It can feel like a ray of light when you’re truly desperate after your income stops in retirement. But that’s not the end of it. The biggest disadvantage of early National Pension withdrawal is the ‘lifetime reduction.’ For every year you receive it early, your pension amount decreases by 6% annually, and if you receive it up to 5 years early, you only get 70% of the original amount. For example, if you were originally supposed to receive 1 million won per month but receive it 5 years earlier, you’ll only receive 700,000 won per month for life. Considering inflation, the perceived reduction will be even greater.
While it might provide short-term relief, in the long run, your retirement income stability will be completely shattered. In an era where life expectancy is increasing, this can be even more devastating. The structure is such that the later you receive it, the greater the total amount you receive, so giving that up is a decision that requires extreme caution. When you see things like this, it feels hopeless, but isn’t the reality of struggling to make ends meet right now even sadder?

The Income Cliff: How to Survive It? Realistic Retirement Preparation Tips

So, how do we overcome this income cliff? Honestly, there’s no single answer, but I’ve looked into a few methods for a better life.

• Utilize deferred pension: If you have some immediate income and are healthy, delaying the start of your pension with ‘deferred pension’ is a good option. Since the pension amount increases by 7.2% for every year you delay, it can be much more advantageous later on.
• Create a second ‘salary’ account: It’s necessary to actively utilize retirement pensions and private pensions to create a steady cash flow even after retirement. Investing in dividend stocks or rental income can also be considered.
• Optimize health insurance premiums: When considering early withdrawal, you must also consider whether to maintain your health insurance dependent status. It’s important to carefully calculate your pension income and other income to prevent the unfortunate situation of being converted to a regional subscriber.
• Re-employment or multiple jobs: Continuing income-generating activities after retirement might be the most realistic answer. Efforts to fill the income gap through re-employment or multiple jobs in areas of interest are necessary.

These might seem like common knowledge, but they are truly facts. Isn’t it those who prepare in advance who live a good life?

The Conclusion: I’ll Protect My Own Retirement!

The news of over 1 million early National Pension withdrawal recipients is a legendary event that clearly shows the unstable reality of retirement in our society. While the pension system is important, it makes us realize once again that we ultimately have to take responsibility for our own retirement. Let’s all persevere through our current lives with a ‘hold on’ mentality and fight for a good retirement! I hope everyone prepares diligently to create a retirement without regrets.

게시물 Early National Pension Withdrawal: Is it True Over 1 Million People Are Doing It? The Income Cliff is Real!이 솜삽 블로그에 처음 등장했습니다.