The landscape of retirement in Australia is shifting.
Thanks to COVID-19, many Australians postponed their transition into their golden years.
Recent figures, however, are indicating a significant trend: we’ve possibly reached the peak retirement age.
A gradual increase has been observed over the decades in the age of retirement
In an article published in the AFR, a latest study from KPMG pinpoints the current figures at 66.2 years for men and 64.8 for women.
Compare this to 2004, when men retired at 63.5 and women at 61.8.
What’s driving this change?
A move away from physically demanding jobs, healthier labour market conditions, and the recent uptick in remote work are key factors.
But, KPMG’s experts suggest we’ve likely hit the ceiling.
The expected retirement age may not push past the current 65 and 66 marks.
Even with a robust job market, there seems to be a natural plateau forming in how long we can expect our workforce to delay retirement.
Interestingly, a report by Colonial First State, due later this month, echoes these findings.
It turns out that retiring by choice is less common than you might think – only 33% of Australians do so.
Health issues, partner concerns, and redundancies are more frequent retirement triggers.
What are the implications of these findings?
According to the AFR article, with Treasury warnings about the doubling of the 65-plus age group in the next four decades, the implications are significant.
More Australians will struggle with the increasing healthcare costs.
However, a delayed retirement age has its perks.
According to economist Terry Rawnsley, businesses benefit from extended access to skilled workers, and the government enjoys a prolonged tax revenue from these individuals.
Rewinding back to the 1970s, men typically retired at 66.3 and had about five more years to live.
Fast forward to today, and the scenario is vastly different.
Many are ‘retiring’ at similar ages but continue to engage in some form of work, living an additional 20 years post-retirement.
This extended workforce participation could help ease the tax burden on younger generations.
Remember, Australians typically can tap into their super from age 60 and start receiving an age pension at 67.
Rawnsley notes the surprising halt in the rise of retirement age over the last year, especially post-COVID, indicating a complex interplay of social and economic factors in determining when Australians retire.
In essence, every additional year people work past 65 is a boon.
It enlarges the tax pool and lessens the financial load on subsequent generations.
Each uptick in retirement age should be a positive sign for the younger population, witnessing the older generations contributing longer.
