Australians are working later in life to make ends meet.
By James Wells
With the average Australian life expectancy increasing, a report shows more and more senior citizens are working to finance their retirement.
Life expectancy rates are more than 80 years for both men and women, and while many hail this as welcome news, financial services company AMP says retirement funding is becoming an increasingly prevalent issue. The company says the federal government’s proposed reforms to the aged pension, namely raising the qualifying age to 70 in 2035, mean senior Australians will need to work for longer and save more to make ends meet.
Modelling in Going the Distance: Working longer, living healthier, from AMP and the National Centre for Social and Economic Modelling (NATSEM), details this.
“Reaching a certain age shouldn’t mean we need to leave the workforce entirely,” says Paul Sainsbury, AMP’s chief customer officer. “Rather, retirement should be a transition phase with reduced levels of work that gives us time to focus on our health and wellbeing.”
AMP and NATSEM also report 1 in 4 men and 1 in 5 women aged in their 60s, will struggle to work due to their health. The report predicts the majority of retirement-aged men and two-thirds of women will be unemployed, and that the fallout from this to be exasperated if the aged pension age is increased to 70. This is despite statistics from the same report showing workforce participation of older Australians has increased from 39 per cent in 1979 to 54 per cent in 2014.
AMP states poor health in older Australians is often a major barrier to workforce participation, and those with long-term health conditions are more likely to work only part time or not at all. It also states mental illness can often a barrier to employment for older people.
Meanwhile, Ian Yates, chief executive of COTA Australia, says the inability to find work can exasperate mental health problems, especially when employment is rejected due to age discrimination.
“Age discrimination is keeping older people out of the workforce,” Yates says. “The research shows that about a third of those who experienced discrimination gave up looking for a job as a result. The experience of being discriminated against based on age is also very stressful and can have a damaging impact on a person’s mental health and self-esteem.
“We can’t afford for these experienced people to be driven out of the workforce because they feel discriminated against. Keeping older people in the workforce benefits our whole society.”
Yates also says when seniors are unable to find work, they often feel they have no choice but to retire prematurely, accessing their superannuation if they can, or living on what Yates calls the “paltry” Newstart allowance, which he says puts seniors “on the road to poverty”. He also says a quarter of all Newstart recipients are over 50 and that they make up over a third of the long-term unemployed.
Yates also calls for a national conversation about the contribution seniors can make to workplaces and society, a call echoed by the Australian Human Rights Commission, which states that Australians over 45 contribute $65 billion to the economy each year.
Age Discrimination Commissioner Susan Ryan says, “Older Australians make significant contributions to the economy, not just in paid work but also in unpaid caring roles and volunteering, both of which are hugely valuable to our nation. When considering the future challenges of an ageing population, policy makers and commentators should take these major contributions into account.”
Ryan also says employers and policymakers need to realise as average life expectancies sharply increase in the foreseeable future, a huge number of senior citizens will face 40 or more years of life without paid work.
In the meantime, AMP and NATSEM say making the workforce adaptable for a transition to retirement will be a major challenge for industry and policymakers, and Sainsbury says keeping senior citizens in the workforce for longer is in the best interests for all.
“Not only does this provide more options for older Australians to save more for retirement,” Sainsbury says, “it also helps the nation harness skills and knowledge that would otherwise leave the workforce. This is good for Australians, good for Australia.”
Do you have an idea for a story?
Email [email protected]