Should you work for longer?

Proposed changes by the Government to lift the Age Pension eligibility age to 70 continue to prove unpopular with Australians, yet it is one of the zombie measures of legislation from Budget 2014/15 that Prime Minister Malcolm Turnbull refuses to kill off.

An estimated 375,000 Australians who are now in their late 50s would be affected by the legislation should it be passed, with future generations having more time to prepare for a longer working life.

While the thought of slaving away for an extra three years is just too much to bear for many Australians, research from the US indicates that working longer may actually be beneficial.

Published in the Journal of Epidemiology and Community Health, the rather lengthily titled Oregon State University study – Association of retirement age with mortality: a population-based longitudinal study among older adults in the USA – concluded that ‘Early retirement may be a risk factor for mortality and prolonged working life may provide survival benefits among US adults.

The group of 2956 participants was split into healthy and unhealthy – as defined by whether or not health played a part in the decision to retire. In the ensuing 18-year monitoring period, 12 per cent of healthy retirees compared to 25 per cent of unhealthy retirees died. The resulting calculation is that being one year older at retirement equalled an 11 per cent lower risk of mortality. For those healthy retirees who waited until 67, the risk of dying was 21 per cent lower than if they had retired at 65.

The trend of working longer continues, with those who waited to age 70 having a lower risk of 44 per cent and a staggering 56 per cent lower risk if working to 72.

Even for those who were classed as unhealthy, there was a lower risk of death associated with working longer. Working to 66 resulted in a reduced risk of nine per cent, while working to 67, there was a 17 per cent lower risk; and at 70, a 38 per cent lower risk. As for those in the unhealthy group who work to 72, the risk is as low as those who are healthy – 56 per cent.

But before you abandon your plans for early retirement, let’s indulge in a reality check.

A 2015 report – Going the distance … working longer, living healthier – commissioned by financial company AMP and undertaken by Canberra University’s National Centre for Social and Economic Modelling (NATSEM) has found that people will simply be too sick to work by the time they reach qualifying age.

Even if health isn’t an issue, retaining or finding a job won’t be easy, with two thirds of men aged between 65 and 69, and 79 per cent of women in the same age group, forecast to be out of the workforce by 2035.

The report found that even the current retirement age of 65 isn’t achievable for many, with the average retirement age now 63; and 83 per cent of men and 92 per cent of women over 65 no longer working.

According to the report, the participation of those aged between 60 and 69 will only increase slightly by 2035, the year by which the pension age will be 70. It is forecast that the increased participation at this age will be one per cent for men and three per cent for women. In regards to health, the report predicts that 25 per cent of men and 20 per cent of women will be too sick to work by the time they reach 70.

Healthy people are considered twice as likely than those in poor health to work in old age. Modelling shows that only a third of Australian men currently in their 40s and early 50s will have the same level of health in their 60s. And for women, nearly half will have poor health by 2035.

Post high school qualifications also play a contributing factor – with 50 per cent still being employed between the ages of 60–69.

Related articles:
Golden rules of early retirement
My husband works… should I claim an Age Pension?
 

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