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 dubious aspect of Treasury’s framework – is running at turbo-charged levels thanks to mass immigration, the participation part seems to also be gaining traction, with the release today of the Australian Bureau of Statistics (ABS) Retirement and Retirement Intentions Survey for July 2016 to June 2017 suggesting that Australians are planning to work longer than ever before:
The age at which Australians intend to retire has again edged higher, according to data released by the Australian Bureau of Statistics (ABS) today.
“On average in 2016-17, Australians aged 45 years and over were intending to continue in the labour force until 65 years, up from 63 years a decade ago,” Chief Economist for the ABS, Bruce Hockman, said.
“This is consistent with the continuing trend of people staying in the workforce for longer,” Mr Hockman said. “A decade ago, around 9 per cent of people aged 65 and over were employed. This has increased to around 13 per cent in 2016-17.”
Across the occupation groups, sales workers had the highest average age that they expected to retire at in 2016-17, at 66 years, while community and personal service workers had the lowest at 64 years.
In 2016-17, financial security (38 per cent) and personal health or physical abilities (21 per cent) remained the most common factors influencing older workers decision to retire. 13 per cent of people cited reaching the eligibility age for an age (or service) pension as one of the main factors.
The ABS also released information for the 3.6 million people who were already retired, more than half of whom were aged 70 years and over…
Reasons for ceasing last job
Among both retired men and women whose last job was less than 20 years ago, a commonly reported main reason for ceasing their last job was ‘reached retirement age/eligible for superannuation/pension’ (36% of men and 22% of women). These persons had average retirement ages of 63.5 years (64.1 years for men and 62.7 years for women). Other commonly reported main reasons given by persons for ceasing their last job were ‘own sickness, injury or disability’ (21% of men and 12% of women) and ‘retrenched/dismissed/no work available’ (7% of men and 5% of women) (Table 5).
Sources of income during retirement
For men who have retired, commonly reported main sources of personal income were ‘government pension/allowance’ (49%) and ‘superannuation/annuity/allocated pension’ (33%). For women who have retired, commonly reported main sources of personal income were also ‘government pension/allowance’ (45%) and ‘superannuation/annuity/allocated pension’ (17%). For persons who have retired, just under half (37%) of women reported ‘partner’s income’ as their main source of funds for meeting living costs compared to 9% of men (Table 6)…
Age intends to retire
Of the 3.9 million persons in the labour force who indicated that they intended to retire from the labour force, 1.6 million persons (40%) did not know the age at which they would retire (36% of men and 44% of women). Of those who did indicate an age (Table 9):
– 20% intended to retire 70 years and older (22% of men and 18% of women);
– 50% intended to retire between 65 and 69 years (53% of men and 47% of women);
– 23% intended to retire between 60 and 64 years (19% of men and 27% of women); and
– 7% intended to retire between 45 and 59 years (6% of men and 8% of women).
The average age at which persons intended to retire was 65 years (65.5 years for men and 64.4 years for women) (Table 9).
Main factor influencing decision about when to retire
For those in the labour force who intended to retire, the most common main factors influencing their decision about when they would retire were ‘financial security’ (41% of men and 34% of women), ‘personal health or physical abilities’ (21% for both men and women), and ‘reaching the eligibility age for an age (or service) pension’ (13% for both men and women) (Table 9).
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.
