Retiring at 70: The Emerging Trend Among Australian Workers

A recent study has highlighted a signifcant shift in retirement expectations among Australians, particularly among educated, whitecollar workers. The analysis by KPMG indicates that the average retirement age is rising, now reaching the highest levels since the early 1970s. This change refects broader labour market dynamics and societal trends infuenced by post-COVID-19 conditions.

Key Findings:

• Rising Retirement Age: Men now expect to retire at an average age of 66.2 years, up from 63.3, while women have seen their expected retirement age increase from 61.6 to 64.8 years.

• Infuence of Education: Higher levels of education correlate with extended working years, suggesting that more educated individuals tend to retire later.

• International Comparisons: Countries with rapidly aging populations like Japan and South Korea have seen retirement ages push to around 70.

Labour Market Contributions: During the COVID-19 pandemic, older workers played a crucial role in flling gaps within the Australian labour market. Between 2019 and 2021, individuals aged 55 and over accounted for nearly 70% of the labour force growth. However, the share of older workers has since decreased with the resumption of international migration and an increase in the younger workforce.

Despite these trends, Terry Rawnsley, a KPMG urban economist, suggests that the continued rise in retirement age may have reached a plateau, citing a shortage of older workers to sustain the growth seen during the pandemic.

Drivers of Extended

Working Years:

• Job Flexibility: Enhanced fexibility in

“knowledge-intensive” roles allows older workers to continue their professional activities beyond traditional retirement ages.

• Health and Education: Better overall health and higher education levels enable longer working lives.

• Financial Needs: Larger mortgages and delayed parenthood mean many Australians need to work longer.

• Technology: Advances in technology facilitate remote working, enabling older Australians to work from more desirable locations, effectively allowing for a form of “semi-retirement.”

Regional Variations: Cities like Perth and Melbourne exhibit the highest expected retirement ages, refecting tight labour market conditions. In contrast, Sydney and Brisbane show lower retirement ages, possibly due to individuals moving to coastal areas upon retirement.

Impact on Wellbeing: A separate study by Flinders University highlights potential negative impacts of increasing the Age Pension eligibility age to 67. The study suggests that delaying retirement can adversely affect life satisfaction, particularly because it may reduce individuals’ sense of control over their lives—a signifcant component of the positive health effects associated with retirement.

As Australia grapples with these evolving labour market and demographic trends, the fndings call for a nuanced understanding of the implications of delaying retirement, not just from an economic perspective but also considering the wellbeing of aging workers. The balance between extending working life for economic necessity and the quality of life in later years remains a critical issue for policymakers and society at large.