Treasurer Joe Hockey’s announcement yesterday of the likelihood that the official retirement age for Australians will be increased to 70, raises the question of what retirement actually means these days.
In times past, retirement was much more clear cut, marking an exact end to your paid working life, and for many, the beginning of life on the pension. However, more recently the lines between paid work and retirement have blurred with many people working beyond the formal retirement age of 65. According to the Australian Bureau of Statistics, participation rates of older Australians aged 55 and over, has increased from 25% to 34% over the past 30 years, with most of the increase occurring in the past decade. This graph shows just how startling this increase has been over the past 14 years.
LABOUR FORCE PARTICIPATION OF PEOPLE AGED 55 YEARS AND OVER – 1980-2010
Source: ABS 1980-2010 Labour Force Survey
This change has been in part driven by financial and lifestyle factors, with people either being unable to afford to retire, or wanting to top up their super while they are still healthy and able to contribute to the paid workforce. As well, the ageing population, the increasing cost of welfare, and skills shortages in some sectors, are seeing governments extol the virtues of people working well past ‘retirement age’.
Many ‘older workers’ actually want to continue to work, which raises particular questions for them and the organisations they work for, about how to manage their careers. One of my recent clients, an accountant in his early sixties, is considering whether to be part of a round of voluntary redundancies now being offered by his organisation. While ‘Neil’ could financially afford to take the package, he is concerned about leaving the workforce too early when he is doing a good job in the work he likes to do. In his words, he is ‘not ready to retire’. Luckily, he is valued by his employer for his skills, and fears that if he left his job he would ‘at his age’ struggle to find another, like some of his peers have.
This decision point for Neil has prompted some further thought and planning about his future work and lifestyle. Some possibilities on the table are scaling back to part-time work, pursuing his hobby of restoring old furniture and using his accounting skills volunteering with a local community group.
Similar stories to Neil’s are being replicated around the country where, for whatever reason – financial, career, lifestyle – people are fashioning a New Retirement. With a little bit of career planning and willingness of employers to both employ and retain older workers and offer more flexible work practices, this key part of the workforce will be able to continue to make an important contribution. We will all be the better for it.