Highly educated workers driving trend into later retirement: KPMG
Australia’s educated workers have benefitted from a tight labour market and improved job flexibility in ‘knowledge intensive’ jobs but later retirement comes with its own policy implications, say economists.
Terry Rawnsley, planning & infrastructure economics director at KPMG, noted policy makers were increasingly concerned about Australia’s ageing population and the growing number of people over 45 who would start to transition to retirement over the next two decades.
“The ageing population and the rising number of people who may choose to retire will have significant impacts on the labour force, consumption patterns and public finances and ultimately economic growth,” he observed.
Australian workers’ expected age of retirement was presently the oldest since the early 1970s. As of 2022, the expected retirement age for men was 66.2 years while the figure stood at 64.8 years for women.
For highly educated workers, however, the expected retirement age rose to over 67 years for those holding a postgraduate degree and 66 years for those with a bachelor degree.
Workers who completed Year 10 and above were expected to retire at just over 65 years.
This rise in retirement age over the past two decades, Rawnsley explained, was driven by a range of factors such as: a shift away from physically demanding jobs, changing social attitudes to older workers, increased labour force participation from women due to policy measures, and a growing trend towards part-time work.
“The pandemic triggered a ‘Great Unretirement’ as a result of a strong labour market and reduced opportunities for international and domestic travel for retirees,” he elaborated.
“Between 2019 and 2022 Australia’s labour force added nearly 179,000 workers aged over 55, representing around a third of all new workers.”
All this would have implications for both personal finances and for government spending, he added.
“An increasing age of retirement indicates that businesses will be able to access skilled labour for longer, although the data suggests that older workers would prefer to work part-time.
“This presents an opportunity for both workers and businesses to come together to retain skilled workers and provider older people with income, social interaction and intellectual stimulation.”
Rawnsley also noted the lack of an accepted approach for measuring the age of retirement.
“There is data on people accessing superannuation or aged pensions, but this doesn’t account for people who are working at the same time,” he said.
“Sample surveys ask respondents if they are retired at a single point in time, but this does not capture the dynamic nature of the transition into retirement.
“Without regular data on people’s transition into retirement, it is difficult to develop policy and programs to deal with the challenges of an ageing population.”
AUTHOR
Rhea Nath
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