Wrong. Badly wrong. With about 67 per cent of the working-age population either in paid work or seeking it, our rate of participation is near record levels.
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And the reason? Too many of the people who could have retired – and, in earlier times, would have – haven’t. They’ve just kept steaming on. (And I don’t just mean yours truly.)
According to research by economist Terry Rawnsley of chartered accountants KPMG, the share of 70-year-old men still in paid employment has increased from one in 10 in 2004 to one in four today. And about 10 per cent of men in their late 70s are still working.
Note that anyone still working in their 70s is doing so of their own volition. It’s possible they’re still working because they can’t make ends meet on the age pension, but more likely they’re working just because they want to.
There is no official age at which people must retire. What many of us take to be the retirement age is the age at which people become eligible for the age pension. And it’s true that governments have been encouraging later retirement by increasing the age for eligibility.
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For decades, the pension age for men was 65, while for women it was 60. But between 1995 and 2004 the age for women was raised to 65. Then, between 2017 and July 2023, the pension age was raised for both sexes from 65 to 67.
So, for women between 60 and 67, and men between 65 and 67, their decisions about when to retire may have been influenced by government policy. According to figures from the Melbourne Institute’s HILDA survey published this week, the proportion of women aged 60 to 64 who were completely retired fell from 69 per cent to 41 per cent over the 20 years to 2023. That may be mainly the government’s doing.
Similarly, the later pension age may explain most of the fall of 20 percentage points in the proportion of women aged 65 to 69 who were completely retired over the 20 years. And the 12 percentage point fall for men.
But if you look at people aged 55 to 59, who were always too young for the age pension, you see the proportion of those completely retired fell over the 20 years by 25 percentage points for women and 11 percentage points for men.
Illustration by Andrew DysonCredit:
That tells you early retirement has gone out of fashion without any help from changing government policy.
So what other factors could be encouraging us to work longer? Well, Australians have long been near the top when it comes to longevity. And advances in medical science have allowed us to live longer, active lives.
Jobs have become less physically demanding. Ill-health is the main reason people choose to retire early.
Population ageing means we’re likely to encounter shortages of labour, which may explain why bosses have become much less keen to show older workers the door. It’s become more common for oldies to go part-time rather than stop working completely.
Another factor is the introduction of compulsory super in 1992, which is making it easier for workers to make decisions about when to retire independent of what’s happening to the pension. You can get your hands on your super once you’re 60, provided you’ve permanently ceased work. And once you’re 65 you can get your super and keep working.
I think that, if we’re living longer, healthier lives doing work that’s less physically demanding, it makes sense to spend that extra time working rather than cooling your heels in retirement. I doubt it will be long before the age pension age is phased up to 70.
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