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More people want to delay retirement and continue working

  •   ASFA
  •   13 November 2024
  • 7
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This note explores the findings of a recent survey of Australians about superannuation and retirement. The survey comprised 1,500 adults – representative of the broader population in terms of age, gender, education and whether respondents reside in urban or regional areas. This note also utilises a range of data from the ABS.

Retirement pathways differ

There is no typical pathway to retirement.

Differences include the age at which people retire permanently from work, their work arrangements at the time of retirement, any changes to work arrangements in the period leading up to retirement, and the age at which they choose to access their superannuation.

While the decisions that shape retirement pathways certainly reflect financial circumstances, these are not the only considerations for many older Australians. Some people delay retirement and remain in the workforce to maintain social connections. Others retire earlier than they would like due to ill health or in order to care for family members – with the latter disproportionately impacting women.

Individual access to the Age Pension and super

In terms of financial circumstances, retirement decisions are framed by the ages at which individuals can access the Age Pension and/or their superannuation. Australian residents, once retired, can access the Age Pension from age 67. For individuals, their eligibility for the pension and their pension amount are determined by income and assets tests.

Typically, an individual’s pension eligibility and the payment amount change during their retirement. Individuals can access their superannuation when they reach their ‘preservation age’ – for those born after 1 July 1964, this is age 60. Members of defined benefit superannuation schemes are often subject to an earlier preservation age.

This does not imply that an individual needs to retire to access their superannuation upon reaching preservation age. In particular, workers are able to access part of their super savings via a transition to retirement income stream (or "TRIS"), which enables them to reduce their working hours while topping up their income.

These settings provide flexibility for older Australians in their pathway to retirement and, more broadly, supports participation by older Australians in the workforce.

Many older Australians remain engaged in the workforce

For the population of Australian adults, Chart 1 below shows the variation in workforce status (which includes retirement), across and within age cohorts – where being "retired" specifically refers to people who have “ceased working and/or ceased looking for work”.

Note that the outcome for the 70+ age cohort comprises the (weighted) average of all 5-year cohorts older than 70. The outcome for the 70 to 74 age cohort (not shown) can be assumed to contain a smaller proportion of retirees, and a larger proportion of employed people, than the average.

Chart 1 shows that a substantial minority of older Australians delay retirement and remain engaged in the workforce.

For the cohort who are either employed or actively looking for work (the blue bars), this accounts for 33% of people aged 65 to 69, and 8% of people aged 70+. In addition, a small percentage of people are not currently in the labour force but want to work: 4% of people aged 65 to 69, and 2% of people aged 70+.

For these two older cohorts, Table 1 provides details of employment arrangements. In particular, it shows a general shift from full-time to part-time work through the two age cohorts. For all individuals who are employed, Table 1 reveals that:

  • Full-time workers account for 16% of the 65 to 69 cohort, and 3% of the 70+ cohort.
  • Part-time workers account for 16% of the 65 to 69 cohort, and 6% of the 70+ cohort.


* Source: ABS, Retirement and Retirement Intentions and ASFA. 

This suggests an increasing preference for part-time work over fulltime work as Australians move through the older age cohorts, and re-enforces the need for flexibility in policy settings regarding the interaction between work and access to superannuation.

Looking ahead, Table 1 also reveals the varying intentions for future workforce engagement among older Australians. Within the 65 to 69 cohort who are currently employed (32% of the full cohort), around 70% have a specific intention to retire – though the expected timing of retirement differs (see next section).

Of the remainder, around 10% consider that they will not retire at all, while a further 20% are not sure if they will do so (similar proportions are reported for the 70+ cohort). For these two groups, financial considerations are likely to be the key driver of retirement decisions.

What age do people intend to retire?

Further insights around pathways to retirement can be gleaned from data on the age at which people (who are currently working or looking for work) intend to retire.

Chart 2 reflects the population of Australians currently aged 65 to 69 only.

  • For people who are retired (blue bars), Chart 2 shows the age at which they retired from work.
  • For people who are not retired (orange bars), Chart 2 shows the age at which they intend to retire.

59% of the 65 to 69 age cohort is retired (sum of the blue bars in Chart 2), with 23% having retired prior to the age of 60.

For those who are not retired (orange bars), retirement intentions are evenly split between those who:

  • intend to retire when aged between 65 to 69 (9%)
  • intend to retire when aged 70+ (9%).

A smaller proportion intend to retire, but are unsure of the age at which they will do so (4%). A substantial minority of those aged 65 to 69 do not intend to retire (3%), or are unsure if they will retire (6%).

This highlights the differences in retirement pathways for older Australians, and the importance of retaining and improving flexibility in superannuation policy settings to support those differences.

It also highlights the fact that there is no typical pathway to retirement – for the majority of Australians it does not mean working full-time until the point of retirement between ages 60 to 67.

Drivers of retirement intentions

While retirement is not generally front-of-mind among younger Australians, it is instructive to assess and compare the retirement intentions of younger and older generations.

Derived from the ASFA survey, Chart 3 compares retirement intentions of the 65+ age cohort, with those of the three previous generations, where the results show the intentions of people who are not yet retired only.

Note, this data is not directly comparable with the previous charts and tables as it excludes people who have already retired.

A striking feature of Chart 3 is the extent of the importance of staying employed in order to keep occupied – across all the age cohorts (black bars in Chart 3). While this result was highest for the 18 to 34 cohort (at almost 40% of respondents), 25% of the 65+ cohort reported this option as best representing their retirement intentions. Generally, these results may also reflect the importance of work as a means to remain active and/or maintain social connections.

The results for the 65+ age cohort (those who have yet to retire only), provide some context for the findings presented in the preceding sections. In particular, that a significant proportion of older Australians who delay retirement, and continue to work, do so for non-financial reasons.

Conversely, the survey results also confirm that some older Australians will need to continue to work for financial reasons. Indeed, 14% of the 65+ age cohort (those who have yet to retire only), don’t think that they will be able to retire (orange bars). This is equivalent to around 3% of the total population of Australians aged 65+.

 

The Association of Superannuation Funds of Australia (ASFA) has been operating since 1962 and is the premier policy, research and advocacy body for Australia’s superannuation industry.

 

7 Comments
Disgruntled
November 20, 2024

Cost of living?

Want to help the kids?

Part time work for social interaction?

Could be a number of reasons to keep working.

I'm planning on retiring at 60 when I can access my Superannuation. Have sufficient funds to live the lifestyle in retirement I'd like to.

Yet still may end up working casual/part time from time to time



Marcus Wigan
November 18, 2024

The two factors that are completely ignored by politicians and the general community is that the fraction of people in the five year intervals from50 onwards are fully engaged and high performance, experienced,and even well and continuously qualified and prequalified. This fraction is increacing steadily and means that 80+ exemplars (I am one) are increasingly common. The second is that the level and quality of their work is ignored as many(I am one) have been doing up to full Professorial level tasks for free and the valuation of this fast rising voluntary work is improved and unvalued.

So retirement for this rising fraction of these cohorts is simply a switch to not accepting payment and choosing where to assist-completely left out of GDP valuation and totally ignored as a key expertise resource. This is related to the treatment of superannuation as an enabler ….. yet only the ASFA and Vanguard survey findings seem to have missed most of this well established set of developments.

Ageism however has simply remained entrenched and blinds most people (and certainly most organisations) to these fundamental changes

Dr David Arelette
November 17, 2024

Here's an idea - you can have a tax payer funded pension or you can vote - every politician only accepts doling out loot to older Australians is they all get to vote so we have a cost that cannot be afforded - so let only those who pay for the system vote for the system and those living from the system had their chance while paying tax.

Bill
November 15, 2024

What is the retirement age for woman

Barry
November 17, 2024

The retirement age for a woman in China is 50.

David Williams
November 15, 2024

It’s very positive that more of us are looking outside the ‘traditional’ event of retirement and seeing opportunities well beyond our entitlement to the age pension, and hopefully beyond our ‘longevity bonus’ (outliving our birth life expectancy). This positive outlook is a significant factor in sustaining our health too.

By understanding more about our own longevity and its potential time frame, we are much better placed to plan for it and make informed choices about what we do. As well as raising our confidence, our longevity planning helps us make our financial and estate planning decisions with less anxiety and hassle and review them as needed.

Jack
November 15, 2024

The whole idea of a retirement system is relatively young in the scheme of things and it hasn't been tested to a great degree. That's likely to change as people live longer and governments keep spending beyond their means, and thereby need to raise revenue more and more - from us, of course.

 

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