Development of an Integrated Model for Long-Term Financial Projection of Social Security

Abstract

South Korea is expected to become a super-aged society in 2025, and the aging of the baby boomer generation is projected to pose a structural risk to the social safety net. In response, this study aims to develop a long-term fiscal projection model to analyze the financial impacts on old-age income security and healthcare/long-term care sectors. The study expands beyond the traditional focus on the three major social insurance programs to include related general budgetary programs. It incorporates institutional linkages between social insurance and general fiscal programs to conduct an integrated fiscal projection. In particular, it analyzes the fiscal inefficiencies caused by "social hospitalization" and projects the associated financial burden beyond 2030. The model will need to be expanded to include fiscal projections related to policies addressing low birthrates and requires ongoing validation and sensitivity analysis.