Older Australians are working for longer and COVID is playing havoc with retirement plans.
According to the Australian Human Rights Commission (AHRC), the percentage of Australians aged 65 and over in the workforce doubled between 2000 and 2015 – and 20 per cent of people over 70 are doing some work.
That number looks set to increase. COVID has put the brakes on just about everything – including, it seems, retirements, with extended lockdowns pushing up the average age of retirement.
Figures released by KPMG show the average age at which people aged 45 expect to retire has risen to 64.5 years, which equals a peak in expected retirement age not seen since after the 2008 financial crisis.
Experts say the ongoing pandemic and the resulting drop in migration has caused a labour shortage in Australia. This means workers are staying in jobs longer, particularly older men. The federal government’s early release of super funds for those affected by the pandemic has also had a negative effect on super balances, keeping people working even longer.
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“With the international migration tap turned off and the labour market fairly buoyant for much of 2020-21, older male workers were retained in the labour force for a bit longer,” Terry Rawnsley, KPMG demographer and author of the report, told the SMH.
Apart from the hit to our collective finances, the pandemic has also restricted travel and made the prospect of retirement possibly a little boring for some.
“Another COVID impact could be that with lockdowns in place there’s no point quitting your job to travel the world. You might as well help out your employer by working a bit longer and keeping yourself occupied,” Mr Rawnsley says.
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But working longer is not an option for everyone. As the lockdowns forced businesses to scale back their operations, many employees were forced out of the labour market and into early retirement – whether they could afford it or not.
The outcome is different for women. Lockdowns have hit female-dominated industries, such as retail and hospitality, hardest, and the average retirement age for women has remained the same as a result. The number of women choosing (or forced) to work longer has been offset by the number of women forced into early retirement.
The trend is similar to data from around the world. Research from the US shows that more than one-third of workers plan to delay their retirement because of financial issues related to the pandemic.
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It’s not only the pandemic that’s increasing the average retirement age as it’s a trend that has become increasingly evident in recent years.
The federal government’s plans to raise the retirement age to 67 in 2023 will obviously further increase the average age people finally leave the workforce. It will reduce the time people are reliant on the Age Pension, but at the cost of precious retirement years.
Has the pandemic delayed your retirement plans? Are you having to work longer than you wanted to? Or are you happy to work into your late 60s and early 70s? Let us know in the comments section below.
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