Aussies refuse to work longer

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By Leith van Onselen

In early 2003, I joined the Australian Treasury where I was immediately introduced to the Department’s “Three P’s” framework, which effectively argued that Australia needed to: 1) boost productivity; 2) raise workforce participation; and 3) increase the population via skilled migration, if the nation was to continue to enjoy rising living standards.

While population – the most questionable aspect of Treasury’s framework – is running hot thanks to strong immigration, the participation part seems to be failing to gain traction, with the release yesterday of the Australian Bureau of Statistics (ABS) Retirement and Retirement Intentions Survey for July 2012 to 2013 suggesting that Australians are refusing to work longer.

According to the ABS, the average age at retirement for recent retirees, that is, people who retired less than five years ago, was 61.5 years – virtually unchanged from the last survey from July 2010 to June 2011. Moreover, the average intended age at retirement was just 63.4 years of age – below the current official retirement age of 65. Again, this was virtually unchanged on the July 2010 to June 2011 survey.

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The ABS also reported that the main source of income at retirement remains the aged pension, with 51% of men 42% of women reporting it as their main income source (see next chart).

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Moreover, reliance on the aged pension tends to increase throughout one’s retirement. While 1.5 million (46%) of those aged 45 years and over who had retired reported that a ‘government pension/allowance’ was their main source of personal income at retirement, almost 2.2 million (66% of all those who were retired) indicated that this was now their main source of current personal income. This represents an increase of 45% compared with the number of people who stated that it was their main source of personal income at retirement (see next chart).

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.