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 still running strong thanks to elevated immigration, the participation part seems to also finally be gaining traction, with the release today of the Australian Bureau of Statistics (ABS) Retirement and Retirement Intentions Survey for July 2014 to 2015 suggesting that Australians are planning to work longer than ever before:
In the survey conducted in 2014-15, 71 per cent of persons intended to retire at the age of 65 years or over, up from 66 per cent in last survey result of 2012-13 and 48 per cent in 2004-05.
“The survey found that 23 per cent of the persons aged 45 years and over are intending to retire at the age of 70 years or over compared with only eight per cent in 2004-05,” said Jennifer Humphrys from the ABS.
The average intended retirement age is 65 years (66 years for men and 65 years for women).
“The majority of Australians intend to retire between 65-69 years, but the results show that now over a quarter of males 45 years and over plan to work past 70 years.”
The survey commenced a few months after the government announced changes to the current qualification age for the Age Pension.
For those in the labour force who intended to retire, the most common factors influencing their decision were ‘financial security’ (40 per cent for men and 35 per cent for women) and ‘personal health or physical abilities’ (23 per cent for both men and women).
Just over half (53 per cent) reported their main expected source of personal income at retirement as ‘superannuation/annuity/allocated pension’.
“There were some differences reported by those who had already retired compared with those who intended to retire regarding their main (expected) source of personal income at retirement,” said Ms Humphrys.
“While 47 per cent of persons aged 45 years and over who had retired reported a ‘government pension or allowance’ as their main source of income at retirement, only 27 per cent of persons aged 45 years and over who were intending to retire indicated that this would be their main expected source of income at retirement.”
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.
