Set to retire? Think again

Australia’s ageing population is heaping pressure on the country’s health, aged care and pension systems, and the government says older Australians must be encouraged to work for longer.

In an address to the Committee for the Economic Development of Australia (CEDA) yesterday, Treasurer Josh Frydenberg signalled a government drive to get people in their mid and late 60s to work longer and undertake training to keep them in touch with the jobs market.

As the government prepares for next month’s mid-year budget update and its 2020 five-year Intergeneration Report (IGR) – the latter will map out the direction of the nation’s finances over the next 40 years – it is facing a number of uncomfortable realities relating to an ageing Australia.

Mr Frydenberg described the scenario as an “economic time bomb”.

“Our population is ageing and this will place new demands on our health, aged care and pension systems,” he told CEDA.

“As more Australians live longer, the number of working age Australians for every person aged over 65 diminishes. Whereas in 1974–75 it was 7.4 to one and 40 years later in 2014–15, it was 4.5 to one, it’s estimated over the next four decades to fall to just 2.7 to 1.”

The 2015 IGR forecast that Age and Service Pension payments would grow from 2.9 per cent of GDP to 3.6 per cent in 2054–55 unless pension cuts in the 2014 budget went ahead. They did not.

It also forecast that aged care funding would grow from 0.9 per cent of GDP in 2014–15 to 1.7 per cent in 40 years, the equivalent of increasing from $620 to $2000 per person.

Mr Frydenberg said that workforce participation among over 65s was six per cent 20 years ago, 12.3 per cent five years ago and 14.6 per cent now.

There are a record 610,000 people aged 65 and older with full or part-time jobs, Nine reports, making it the fastest growing age group in the jobs market in the nation.

But another rapidly growing group is the number of older Australians who are unemployed and actively seeking work. Factor in that the access age for the Age Pension is due to reach 67 by mid-2023 and there is considerable pressure on older Australians.

Anglicare Australia acting executive director Roland Manderson says the jobs market, and Newstart, are failing older jobseekers.

“The job market is changing fast and age discrimination makes it harder to compete,” he says.

Mr Manderson says the low rate of the Newstart allowance creates particular problems for older people.

“The stereotype is that Newstart is for younger people, but that’s a myth. Around half of all people on Newstart are mature-age jobseekers – and the number of older Australians on Newstart is growing by 10,000 a year.

“Instead of preparing to retire, many people are now selling their homes and spending their savings. Nobody should be forced to retire into poverty.”

Mr Manderson says the government must raise Newstart and stop lifting the pension age.

Are you working longer than you had anticipated? Are you having trouble finding suitable work?

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Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

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