A new book titled Retiring in a New Age: Life after Paid Work by University of Sydney researchers Professor Russell Lansbury and Professor Marian Baird identifies four retirement types.
There are “Leavers” – a group “weakly engaged” with their previous work but who have developed strong interests in new activities, often community-oriented. They have “little interest in pursuing any aspect of their previous career and sought to change the direction of their lives”, write Lansbury and Baird.
Second are the “Stayers”, who remain strongly connected with their previous work and are weakly engaged with new non-work-related interests. Some are motivated by an intrinsic interest in their occupation, but others are anxious about their financial situation and feel the need to continue earning.
Third are the “Blenders”, who remain partly engaged with their previous work while simultaneously developing new interests. This group undertakes “some work activities that draw on their previous areas of expertise while developing totally new areas of interest”.
Finally, there are “Disengaged” retirees connected to neither past work nor new interests. People in this group tend to be more isolated than others; their disengagement is sometimes the result of illness or the death of a partner.
These groups describe the Boomer generation, who are now all aged in their 60s and 70s (the oldest Boomers turn 80 next year).
But there are important differences between the Boomers and Gen X that will again reshape retirement in Australia.
The first is the structure of the economy. When the first Boomers came of age, blue-collar employment was far more common. During the early 1970s, about one in four Australian jobs was in manufacturing.
By the time Gen X first hit the jobs market, the share of knowledge-based jobs in sectors such as finance, professional services and IT was on the rise following the sweeping economic reforms of the 1980s, including a reduction of trade barriers and the deregulation of financial markets. By the mid-1990s, the share of manufacturing jobs had fallen to about one in eight (and is now just one in 17).
The prevalence of knowledge jobs among Gen X workers will allow a bigger share of that cohort to combine work with leisure and other non-work activities in their senior years.
In the past, injury and ill health has forced many blue-collar workers into retirement. But that won’t be such a big driver of retirement among Gen X workers employed in jobs with low physical demands.
Terry Rawnsley, a KPMG economist who researches retirement behaviour, says knowledge workers have more scope to scale back their hours or do short-term assignments as they get older.
“White-collar skills are very flexible, so it’s easy to build a retirement transition around that sort of job,” he says.
The wide acceptance of remote work since the pandemic will also facilitate Gen X knowledge workers who want to combine work and leisure as they age.
Another factor differentiating Boomers from Gen X is the introduction of compulsory superannuation in 1992, which means that most Gen Xers have been saving for retirement since they started work.
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Their savings have also been bolstered by the record period of uninterrupted expansion in the Australian economy from 1991 until the COVID-19 crisis in 2020.
The compulsory superannuation system promises to give Gen Xers more options in retirement than previous generations, who relied more heavily on the aged pension.
“For many of those older Boomers, the aged pension was the primary, or even only, source of income, so when they qualified for it, work was done and dusted,” Rawnsley says. “But Gen X will have other income streams, and that means more flexibility in how they work in the senior years. There also might be a desire to keep topping up that super balance.”
But it is not all good news for Gen X.
Lingering housing debt will keep some at work.
“When the first Boomers reached their 60s, the home mortgage was long gone for most,” Rawnsley says. “But many Gen Xers will still be carrying a bit of a balance, even in their 60s.”
Low-wage Gen Xers will have fewer choices and may feel the pressure to work well beyond the “normal” retirement age, should their health allow it. The same goes for many Gen X women who took long career breaks to care for family.
It seems most members of Gen X are set to be Stayers or Blenders.
