The Minister for Aged Care and Indigenous Health, Ken Wyatt, has suggested that older Australians should take an unfunded gap year before they retire. The more we consider this suggestion, the worse it looks.
Yesterday, Mr Wyatt addressed the National Press Club on ‘Australia’s New Age of Opportunity’. During his speech, he suggested that the gap year would allow people to plan their futures while ensuring that they have a job to go back to. The upside, he noted, was that now that those who finish work in their 60s generally live another 20 years, the year off would allow them to return to work with ‘renewed vigour’.
Wow. A gap year would mean 12 months’ leave of absence without pay.
And wow again. Just what planet is the Minister on, we wonder? According to YourLifeChoices most recent Retirement Affordability Research, 81 per cent of all retirees believe they will outlive their money. And 56 per cent of retirees were forced into retirement by ill health or lack of work opportunity – not because they actually wanted to leave the workforce. We know from our other research conducted in partnership with the Australian Human Rights Commission’s former Age Discrimination Commissioner, Susan Ryan, that those aged 50 or over who find themselves out of work can take more than a year to secure full-time employment again – and some never do. So how do senior Australians who are currently underfunded for retirement (think mean superannuation balances of $322,000 for men and $180,000 for women) manage to take off a year without pay? Has the Minister actually modelled what a hit to their retirement nest eggs this might be? We are aware that no modelling has been done for the National Energy Guarantee (NEG) to date, so is this a similar scenario where an idea is floated and an assumption made that it’s economically viable?
Let’s face it. The idea of a year off at age 60 is immensely appealing. But if you do follow Minister Wyatt’s advice and take that gap year, spending a fair whack of your retirement nest egg to fund yourself, then you’ll need to hope like hell you have work to go back to.
Thought bubbles are not really useful when it comes to retirement income policy. What we need is sustainable and affordable policies to ensure that older workers are not subject to ageism in the workplace, instead, that they are valued enough to maintain their jobs for as long as they are able to work.
Is a gap year the best way to celebrate your 60s? If so, how will you fund it? Do you think you can return to the workforce afterwards?