Countries around the world are considering raising the retirement age and slashing pensions in response to budget pressures. Will Australia be forced to follow suit?
Skyrocketing inflation has affected all Australians, but especially retirees. Big increases across major spending categories such as food, transport and energy disproportionately affect people living on fixed incomes.
It’s the same story in countries all over the globe with some governments considering raising the retirement age and/or implementing big cuts to pension budgets.
Age Pension eligibility age in Australia is 66 years and six months for people born between 1 July 1955 and 31 December 1956; or 67 years for anyone born after that. That will be the Age Pension age from 1 July 2023.
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In the face of austerity measures across the globe, should older Australians be preparing for a similar extension to the official retirement age?
No, says Glen McCrea, deputy CEO of the Association of Superannuation Funds of Australia (AFSA).
He says retirees in Australia are in a much better position than their international counterparts – and it’s all thanks to the way the superannuation system complements the Age Pension system.
“We can take some solace from the fact that the investment we’ve made in superannuation over the last three decades is acting as a buffer in the face of these strong headwinds,” Mr McCrea says.
Read: Inflation hits retirement income hard
“Governments in Europe and the UK are actively considering raising the retirement age or slashing the amount of pension retirees receive as they struggle to deal with the global economic challenges they are facing.
“In contrast, the Age Pension remains affordable for the government in Australia where, in aggregate, retirees on average have larger private retirement savings balances than in most countries in the world.”
AFSA’s retirement standard figures for the September quarter indicate a couple aged around 65 would need to spend $68,014 per year, and a single person $48,266, if they want to maintain a ‘comfortable’ lifestyle in retirement. That was a 1.9 per cent increase on the previous quarter, or roughly in line with wider inflation.
But it’s worth taking the AFSA figures with a grain of salt, as some have criticised their figures as being too high and others too low. Retirement is, after all, a very individual thing.
Read: Australia moves up list of best countries for retirees
In July, a Super Consumers Australia analysis found a more realistic figure for the same standard of living would be around $56,000 per year for couples and $38,000 for singles.
However, YourLifeChoices’ most recent Retirement Affordability Index estimates the following annual expenditures for four homeowning retiree groups: $84,393 (couples with private income), $48,787 (couples who also receive an Age Pension), $48,214 (singles with private income) and $26,986 (singles who also receive an Age Pension).
Would you support any changes to the retirement age? Are you confident you’ll have enough savings in retirement? Let us know in the comments section below.
Everyone gets the 67 years dates incorrect. If you’re born 1 Jan 1957, you’re eligible for the Age Pension on 1 Jan 2024, not 1 July 2023. There’s always been a 6 month gap between the previous eligibility period and the new one, as it’s an 18 month period, not a 2 year period. BTW a person born on 31 Dec 1956 will be eligible for the Age Pension on 1 July 2023, as there’s not 31 days in June.
It should have remained at 65 like it had been for generations. The age pension should also be universal and the same amount for everyone not less for members of a couple.
I agree with David Ryder, the age pension should have stayed the same with people deciding whether they want to retire or not. If the decision was made to screen people better for the pension, those who had actually earned their pension by working would be able to have a slightly larger pension. Those able to work who had spent their whole life sitting on their a**e unless physically not able to work, would not get one unless they did something for it.
I also agree that the age of 65 is the preferred time to retire and receive a pension accordingly. Not every worker has been working in offices. Many trades people are unable to carry on their usual duties, such as painting, carpentry, etc.
Again you also make a mistake repeatedly like many other official institutions to refer to UK and Europe separately. UK is part of Europe and this has always been the case.
Where do you get your information from that the UK has always been part of Europe.
Its impossible to extend retirement to even later In Life. The brain slows down. Do you want your nurse to kill a patient. Nurses after 60yr old struggle. The excessive workload and heavy work makes it difficult. And the older you are the more chance of making mistakes.
Yes there is discrimination in the work place. The amount of times I’ve heard younger nurses saying. ‘She should just retire ‘ is getting more frequent. I’ve said to them how can she. Where will she get income ? She can’t get the pension yet. And I remind them it will be them one day.