The Australian retirement age is the highest it has been in decades, with thousands now working well into their 70s. It’s sparked a warning for Aussie workers to put strategies in place now, or risk facing serious pressures when it comes time to exit the workforce.
The expected retirement age for men is now 67 years, fresh KPMG analysis found, while for women it has climbed to 65.3 years. More than a quarter of a million Aussies are working into their 70s, with the share of 70-year-old men working jumping from one in 10 to one in four over the last 20 years.
Your Future Strategy managing director Gareth Croy told Yahoo Finance he was seeing the trend play out amongst his clients. While some clients are choosing to continue to work into their 70s for the fulfilment it brings, others are working out of financial necessity.
“You’ve equally got people who have just not kept their eye on the ball in terms of what they need to retire and then engaged in it too late in the piece,” Croy said.
“Then there are, of course, people who have had some financial issues which have contributed to not getting to the financial position to retire.”
Rising property prices and cost of living increases have also had an impact on people’s retirement plans, with Croy noting moving “goal posts” meant some people were now working longer to achieve their goals.
KPMG found that increases to age pension eligibility over the past decade had contributed to the shift up in retirement age, with the age rising from 65 to 67.
But it found the long-term shift was being driven by a growing cohort of “ageless workers”. These are older workers who are happy to stay in the workforce well beyond retirement age.
“The growth in ageless workers isn’t a recent phenomenon that spiked following the cost-of-living pressures of 2023-24,” KPMG urban economist Terry Rawnsley said.
“It is a longer-term trend that suggests a structural change to the concept of retirement.”
The latest HILDA survey found financial motivations, including super rules, pension eligibility and financial security, have played an increasingly important role in shaping retirement.
In 2003, only 12.7 per cent of recent retirees cited financial reasons as their main motivation for retiring.
This figure doubled in 2007 to 26.3 per cent and has subsequently declined somewhat to around 20 to 25 per cent.
Aussies warned to create retirement strategy early
If the idea of working into your 70s isn’t something you are keen on, Croy said it was crucial to actively think about your retirement early on.
Croy said the earlier you consider your retirement strategy, the less “dramatic change” you may need to make to achieve your goals.
“If you don’t really consider retirement until you’re 60 but you want to leave the workforce at 65, you’re starting to put a lot of pressure on a pretty short timeframe,” he said.
Croy said it was important to think about your goals and start putting a strategy in place. For example, that might be paying off your mortgage before you retire.
Gareth Croy, Founder, Managing Director at Your Future Strategy
It can be worth seeking professional advice on your investment portfolios and superannuation, and understanding how it is invested and whether it suits your risk profile and life stage.
Croy gave the example of someone in a balanced portfolio who may experience underperformance when they potentially could have afforded to take on more risk.
“The challenge is that when they realise that their super balance is going to undershoot where they need to be to retire, they’re then under pressure to take on more volatility at a time when they don’t have the timeframe to invest for that longer term to allow if there was a downturn, the correction time,” he said.
How much money do you need to retire?
Figuring out how much money you need to retire will depend on your personal circumstances, including the lifestyle you want.
This assumes they own their own home and receive a part age pension.
Croy said it can be helpful to think about the income your household has now and your savings capacity.
“If you take the savings capacity off what your after-tax income is right now, that’s how much you’re spending on your current lifestyle,” he said.
“If you want that lifestyle into retirement, that’s the income you’re going to need to generate.
“If you want to do more things like international travel that you’re going to be able to do because you’ve got the time because you’re not working, you need to factor that into the budget too.”
About Your Future Strategy
Your Future Strategy is a multi-disciplinary financial services firm with experts across the financial landscape, including qualified professionals in financial planning, strategic accounting, lending, investments, estate planning and superannuation.
As financial strategists, they help create a well-designed pathway for people to tick off financial goals to give them choice in their future, whether that’s saving for children’s schooling and university, building a significant property portfolio, creating and protecting their legacy, or retiring early.
The ‘micro-retirement’ trend is increasing in popularity, particularly among Gen Z and Millennial workers, seeing them turn away from the traditional retirement model that heavily relies on superannuation.
The following article was taken from Yahoo Finance. Read the article in full below: https://au.finance.yahoo.com/news/dire-retirement-reality-as-aussie-workers-forced-to-work-into-their-70s-too-late-190051873.html
The Australian retirement age is the highest it has been in decades, with thousands now working well into their 70s. It’s sparked a warning for Aussie workers to put strategies in place now, or risk facing serious pressures when it comes time to exit the workforce.
The expected retirement age for men is now 67 years, fresh KPMG analysis found, while for women it has climbed to 65.3 years. More than a quarter of a million Aussies are working into their 70s, with the share of 70-year-old men working jumping from one in 10 to one in four over the last 20 years.
Your Future Strategy managing director Gareth Croy told Yahoo Finance he was seeing the trend play out amongst his clients. While some clients are choosing to continue to work into their 70s for the fulfilment it brings, others are working out of financial necessity.
“You’ve equally got people who have just not kept their eye on the ball in terms of what they need to retire and then engaged in it too late in the piece,” Croy said.
“Then there are, of course, people who have had some financial issues which have contributed to not getting to the financial position to retire.”
Rising property prices and cost of living increases have also had an impact on people’s retirement plans, with Croy noting moving “goal posts” meant some people were now working longer to achieve their goals.
KPMG found that increases to age pension eligibility over the past decade had contributed to the shift up in retirement age, with the age rising from 65 to 67.
But it found the long-term shift was being driven by a growing cohort of “ageless workers”. These are older workers who are happy to stay in the workforce well beyond retirement age.
“The growth in ageless workers isn’t a recent phenomenon that spiked following the cost-of-living pressures of 2023-24,” KPMG urban economist Terry Rawnsley said.
“It is a longer-term trend that suggests a structural change to the concept of retirement.”
The latest HILDA survey found financial motivations, including super rules, pension eligibility and financial security, have played an increasingly important role in shaping retirement.
In 2003, only 12.7 per cent of recent retirees cited financial reasons as their main motivation for retiring.
This figure doubled in 2007 to 26.3 per cent and has subsequently declined somewhat to around 20 to 25 per cent.
Aussies warned to create retirement strategy early
If the idea of working into your 70s isn’t something you are keen on, Croy said it was crucial to actively think about your retirement early on.
Croy said the earlier you consider your retirement strategy, the less “dramatic change” you may need to make to achieve your goals.
“If you don’t really consider retirement until you’re 60 but you want to leave the workforce at 65, you’re starting to put a lot of pressure on a pretty short timeframe,” he said.
Croy said it was important to think about your goals and start putting a strategy in place. For example, that might be paying off your mortgage before you retire.
It can be worth seeking professional advice on your investment portfolios and superannuation, and understanding how it is invested and whether it suits your risk profile and life stage.
Croy gave the example of someone in a balanced portfolio who may experience underperformance when they potentially could have afforded to take on more risk.
“The challenge is that when they realise that their super balance is going to undershoot where they need to be to retire, they’re then under pressure to take on more volatility at a time when they don’t have the timeframe to invest for that longer term to allow if there was a downturn, the correction time,” he said.
How much money do you need to retire?
Figuring out how much money you need to retire will depend on your personal circumstances, including the lifestyle you want.
The Association of Superannuation Funds of Australia’s Retirement Standard estimates singles would need $53,289 a year for a comfortable retirement, while couples would need $75,319 a year.
This assumes they own their own home and receive a part age pension.
Croy said it can be helpful to think about the income your household has now and your savings capacity.
“If you take the savings capacity off what your after-tax income is right now, that’s how much you’re spending on your current lifestyle,” he said.
“If you want that lifestyle into retirement, that’s the income you’re going to need to generate.
“If you want to do more things like international travel that you’re going to be able to do because you’ve got the time because you’re not working, you need to factor that into the budget too.”
About Your Future Strategy
Your Future Strategy is a multi-disciplinary financial services firm with experts across the financial landscape, including qualified professionals in financial planning, strategic accounting, lending, investments, estate planning and superannuation.
As financial strategists, they help create a well-designed pathway for people to tick off financial goals to give them choice in their future, whether that’s saving for children’s schooling and university, building a significant property portfolio, creating and protecting their legacy, or retiring early.