Australians forced to retire early due to health problems that could be treated with early intervention each lose up to $142,100 in superannuation, according to a new report.
It found a staggering $20.8 billion was being lost in superannuation each year when Australians aged 50-plus were forced into early retirement as a result of ill-health. The overall impact on gross domestic product (GDP) was $45.3 billion, it said.
Effective health strategies and medicines for those at risk had the potential to recover $1.9 billion in super and return $3.9 billion to the economy.
Our Health Our Wealth: The Impact of Ill-Health on Retirement Savings in Australia was launched in Canberra at the annual health industry event, PharmAus18.
Conducted by a research team led by Professor Bruce Rasmussen, director of Victoria University’s Institute of Strategic Economic Studies (VISES), the report used data from the Australian Bureau of Statistics (ABS) Household Income and Labour Dynamics in Australia (HILDA) survey.
Professor Rasmussen said that while the research noted early retirement due to ill-health was hard on individuals, their families and carers, it also quantified the financial impact on the Australian economy.
The report notes that Australia’s ageing population already presents significant health and aged-care challenges and that early retirement from illness magnifies those pressures.
The Organisation for Economic Cooperation and Development (OECD) estimates the number of individuals aged 65 or older relative to those of prime working age (20–64-year-olds) is set to more than double across the 34 OECD countries from 24 per cent in 2005 to 52 per cent in 2050.
The report found that those retiring early (aged 50–54) due to ill-health lose up to $142,100 in super – comprising $118,600 in balances foregone and $23,500 in funds withdrawn.
It estimates that close to 300,000 more Australians aged 50–64 would be working if their health could be improved from poor/fair to good/excellent through early prevention strategies.
“Early retirement due to ill-health imposes a significant economic cost, almost 4.5 times government expenditure on the Pharmaceutical Benefits Scheme in 2016–17,” says Liz de Somer, chief executive of Medicines Australia, which conducts the annual symposium. “It’s very important to consider ways to address this and take action while illness may be more manageable, to retain a person’s ability to function effectively and remain in the workplace.”
Common health conditions associated with early retirement, according to the report, include psychological and psychiatric illness, particularly depression and anxiety, and musculoskeletal and connective tissue conditions such as osteoarthritis, osteoporosis, neck and back problems.
Treatment strategies for those aged 45 and over with psychological issues could prevent 19,325 early retirements and save the economy about $16.3 million, and for those with musculoskeletal conditions, early intervention could reduce the number of early retirees by 8734 and generate $9.4 million in savings.
The total combined economic benefit of addressing these conditions would be $3.9 billion in annual economic benefit and $1.9 billion in reduction of lost super.
“Advances in healthcare promise to change the management of disease in the future,” said Ms de Somer, “particularly the development of new medicines for more difficult-to-treat illnesses such as cancer, dementia and other neurological conditions.
“These findings clearly indicate there’s much to be gained in keeping Australians healthy.”
Professor Rasmussen told AAP: “One of the suggestions might be that there should be better screening of both mental illness and muscular-skeletal problems, probably in the workplace.
“The idea of getting onto these things early, as we’ve learnt in so many treatment programs, is a real advantage.”
Have you had to retire early due to ill-health? Were you able to take advantage of any treatments to lessen the impact of your condition? Have you had to rethink your retirement because of your health problems?