COVID-19 may have a more serious affect on older people’s health, but it is younger people who will suffer most from the economic impact of the pandemic, says economist Jason Murphy.
According to the Australian Bureau of Statistics’ latest Retirement and Retirement Intentions figures released on Friday, in 2018-19 there were 3.9 million retirees. More than half (55 per cent) of people over 55 years were retired, up from 53 per cent in 2016-17. Fifty-five per cent of retirees were women, and the number of retired women increased more than men. The average age of retirement was 55.4 years.
The ABS data also revealed that 500,000 people over 45 intend to retire in the next five years, two million intend to retire ‘some day’ and around half a million say they never intend to retire.
The average age they planned to retire is 65.5 years. Although, on average, women retire earlier than men.
Almost half (46 per cent) of those who retired did so because they had reached retirement age or were eligible to access their superannuation. Two in 10 (21 per cent) retired due to health, injury or a disability and one in 10 (11 per cent) were retrenched, dismissed or had no work available.
Women were more likely to have retired to care for an ill, disabled or elderly person than men (8 per cent versus 2 per cent).
This data was collected before COVID-19. Some economists are saying that, post-COVID-19, retirement intentions will significantly change, as many will now work longer in an attempt to claw back losses to superannuation savings and other investments.
“Sadly, retirement is not always a choice. Many older people lose their job, look for work for a few years, and then go straight from unemployment to retirement. Older workers often have a very hard time finding a new job,” writes Mr Murphy.
“But you can bet that unemployed older workers will be in hot competition for every job that is listed, because you can’t get the pension until you turn 66. Finding the right policy settings for this time is important. We don’t want to make it even harder than necessary for older people to retire. This would, for example, be a tough time to lift the pension age.”
Between 2016-17 and 2018-19, the Age Pension was still the main source of income for most retirees. While more people retired with superannuation as a source of income, the increase was greater for men than women.
Around 30 per cent of women who retired, and 7 per cent of men, did so with no personal income.
More than a third (36 per cent) of retired women relied on their partner’s income to meet their living costs at retirement (compared to 7 per cent of retired men).
For people intending to retire, the main factor influencing their decision was having enough money to fund their retirement. COVID-19 has set many a retirement plan back years.
And while financial security for older people is of course concerning, this last point is the sticking point for younger people.
Job losses caused by COVID-19 are far greater for younger people, as they are typically the ones who occupy hospitality, tourism and entertainment jobs.
Those aged between 20 and 29 suffered 11.8 per cent job losses and 10.3 per cent wage losses, compared to 4.1 per cent job losses and 7.6 per cent wage losses for those aged between 50 and 59.
And because many of the jobs lost are of a casual nature, many young workers don’t qualify for JobKeeper payments.
The stock market crash caused by COVID-19 may have decimated Australian savings and shattered many nest eggs. Many older people may now be looking to extend their working lives so they can afford to retire comfortably (or at all), and so are likely to be competing for many of the same, albeit possibly limited number of jobs that remain or come back on the market.
For the foreseeable future, many businesses look likely to take a long time to recover from the economic devastation caused by COVID-19. This could mean far fewer jobs and opportunities for everyone, but possibly fewer opportunities for younger people to progress, as older people may, rightfully, hang onto their jobs for as long as they can should they need to recoup pandemic losses.
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