Early retirement has been on most people’s agenda since it became a popular idea in the 1970’s but it seems Aussies are now waiting longer and longer to ‘hang up their boots’.
At the back end of 2022, the age at which people expected to retire had drifted up to 66.2 years for men and 64.8 years for women*.
But why is that – why are Australians working longer and retiring later?
First is the shift to the knowledge economy over the last 50 years. Work is not as physically hard on the body as it once used to be, and the digital age has made the working day more flexible than ever. This trend was exacerbated during the Covid19 pandemic as both knowledge economy workers and their employers shifted quickly to remote and hybrid working practices.
Second is the global shortage of skilled workers. “The War for Talent’ a McKinsey study in the 1990s detailed a shift in the balance of power in the employment relationship towards the employee and much of that thinking remains valid today.
The National Skills Commission estimates that Australia will face a shortfall of 200,000 workers by 2050. As the population ages, there may be fewer people of working age available to participate in the labour market. This is likely to result in labour shortages in many industries, which may in turn put upward pressure on wages and prices. Equally, as older workers retire, there will be a shortage of workers with specific skills and experience. This again may well lead to increased competition for skilled workers, and the commensurate higher wages and salaries.
When older workers eventually do retire, there will also be a shift in the overall age profile of the workforce, which will facilitate changes in workplace culture, as well as changes in the types of jobs and roles that are available.
However, over the shorter term, older workers bring a wealth of skills, knowledge, and experience to the workforce. By leveraging this expertise, employers can improve productivity, reduce staff turnover, and improve the quality of work.
Older workers can also serve as mentors and coaches to younger workers, passing on their knowledge and experience. As older workers being to contemplate retirement, they may be looking for more flexible work arrangements. This could include part-time work or job sharing, and by offering these options, employers can retain valuable workers and improve employee satisfaction.
So, several factors have contributed to Aussies retiring later in life. Changes to the pension age, increased life expectancy, financial pressures, and improvements in health and wellbeing have all played a role. Additionally, there is a growing awareness of the benefits of continuing to work in later life, including the opportunity to stay active, engaged, and socially connected.
However, it's worth noting that not all older Australians have the same opportunity to continue working in later life, not least due to age discrimination in the workplace, or other barriers that prevent them from working longer. As such, it's important for policymakers and employers to consider the needs and challenges of different groups within the workforce and ensure that everyone has access to the support and resources they need to work for as long as they choose.
*KPMG Australia
Comments