After a career spanning business, software analysis and the Arts, and now in my late 50's, a few years ago I decided to reinvent myself as a financial planner. I studied and started applying for jobs. Over many years, even if I made it to the interview stage, I have been amazed to hear the excuses as to why I am not suitable. My favourite is “too creative”. I believe ageism is the real issue.
Eventually, I secured a one year casual contract with a major dealer group looking after their existing superannuation and insurance customers, which I finished in February 2016.
The plight of the 'renting transitionals'
In dealing with these customers, it became evident that there is a particular group of people who are being ignored by both our political and financial classes. I call them the 'renting transitionals'. They are in transition between mature-age (50 years-of-age upwards) and age pension age. Not only are they in transition between jobs, but crucially, they do not own their own homes. Surviving on the age pension as a non-homeowner is a topic for another day.
With the superannuation system still evolving into maturity, when these renting transitionals, especially women, lose a job, they do not have sufficient funds to support themselves to preservation age, let alone pension age. Even when they can access their super, perhaps under the 'hardship case' provision of release or a Transition to Retirement pension, it is insufficient to pay for both rent and food. The money won’t last the distance.
For those that qualify, the Newstart Allowance for a single person is only $13,717 per annum, which will not cover basic living expenses, and any income earned reduces the Allowance.
Home ownership is a massive issue
Many financial commentators quote the ASFA Retirement Standard as the benchmark for living standards. Their latest annual budget for a ‘modest’ standard is $23,797 for a single person, and $43,184 per annum for a ‘comfortable’ retirement. The crucial qualification is:
“Both budgets assume that the retirees own their own home outright and are relatively healthy.”
I have a colleague who was made redundant after working for Arts and Heritage organisations for many years. The recent cuts to the Australia Council do not come without personal consequences. The types of jobs she has held mean her income has been low, she has been unable to buy a house, her super balance is accordingly smaller and at age 59, she has not been able to find another job. The loss of manufacturing jobs and the downturn in resources and construction have hit others hard. My colleague is increasingly isolated and losing confidence which in turn affects her chances of employment. It causes profound stress, depression and suicidal thoughts.
Now her TTR pension may also be subject to 15% earnings tax further affecting its longevity.
What do we do? This is not an issue that will go away for older workers. It is not that they do not want to work. Often people employed in the Arts are working extremely long hours that are usually underpaid, and they rely on other jobs to get them through. Income protection policies, while highly desirable, are out of the reach of these low income earners. Newstart (again, if they qualify) is a form of entrenched poverty. If it was maintained until their other earnings reached a liveable wage, it may be useful.
Council of the Ageing SA Chief Executive, Jane Mussared, recently said:
“Home ownership was a bedrock for older Australians. Our pensions are low by OECD standards but were propped up by high ownership levels and low mortgage levels. (Federal MP) Mark Butler talks about home ownership rates being in free fall among older people. Put in a period of unemployment prior to aged pension, low levels of super, low earnings over a lifetime and high levels of caring responsibilities and we have a looming problem.”
What do large institutions say about employing older people?
Nearly every major corporation has a public policy on the need for diversity in the work place. Often, there is a heavy focus on gender balance, pushing other diversity issues such as age, disability and religion into the background.
It is common for a policy to state that the company’s employees should reflect the characteristics of its customers. This ensures an empathy with customer problems, leading to greater understanding and hopefully, business retention. For example, the Commonwealth Bank has a microsite devoted to sustainability and the need to 'reflect community diversity', stating:
“The Australian community is diverse, dynamic and culturally rich. It is also changing as the population ages and we become more economically and culturally entwined with our Asian neighbours. As one of Australia’s largest employers, with a nationwide branch network, it only makes sense for our workforce to reflect the diversity of the Australian community.”
“Diversity is an essential element of the Commonwealth Bank Group’s new strategic vision: to excel at securing and enhancing the financial wellbeing of people, businesses and communities. A key area of focus over the next 12 months will be further developing our response to the challenge of age diversity.”
A good place to start on age diversity would be employing the number of older people in proportion to the number of older people among CBA’s customers. Now, that would be a big number!
What else can be done?
Luckily, I have sufficient funds and my own home. I will shortly complete my Advanced Diploma in Financial Planning and will continue to look for full-time work. Failing that, I will retire if the government starts taxing my modest transition to retirement pension. The renting transitionals are not so fortunate.
Do we need an education campaign reminding 40-year-olds that they may need to provide for themselves without government assistance from anywhere between the ages of 50 to 70, before the likely age pension kicks in?
We need solutions beyond standard income protection policies. For low paid workers who are aging, many of these favourite insurance solutions do not present themselves. Are there new affordable ‘Living Wage Mutual Income Protection’ insurance policies that could be designed for this demographic?
The alternatives to taking action are mental health issues and homelessness affecting potential workers who do not have the resilience of youth to tide them through. I worry about that my colleague may be among the growing number of older women who experience homelessness for the first time later in life. Older, single women are vulnerable as they may lose their jobs early, lose a spouse or be discriminated against in the housing market. As Jane Mussared said:
“It is your mother, sister or grandmother that is at risk of being forced to sleep rough.”
I would dearly like to hear how we help people get through this period until they can at least qualify for the age pension. Have you survived a similar period? How are advisers helping clients with this potential problem?
Barry French has a BA and is currently completing an Advanced Diploma in Financial Planning. He formerly worked as Technical Support Manager for an international software company. His passion is to provide financial services and education to people in the Arts and the 80% of people who receive the least advice and probably need it most.