Sally Loane, CEO of Financial Services Council (FSC), said, “The Intergenerational Report released by the Federal Treasurer earlier this year made it clear that Australians will be living longer than ever. Because of this, retirement at 60 – unless it is due to poor health or caring responsibilities – is beginning to seem redundant.”
Why we’re deciding to work longer: Findings of the report
61% of older workers say they continue to keep working for their financial security, with other respondents stating reasons including personal enjoyment, a sense of accomplishment, and independence.
Interestingly, the report found 65% of older workers are already satisfied they have sufficient funds put aside to retire.
This matches last year’s rates, showing that our finances have stabilised after 2012, when less than 50% were satisfied that they could safely retire. But Nicolette Rubinsztein, General Manager of Retirement at Commonwealth Bank, said older workers stay in the workforce because they would prefer a more comfortable retirement.
It seems increasingly feasible that Australia could adjust to keeping people in the workforce for longer. Employers are becoming more willing to retrain their mature staff for different roles, as they value the advanced skills and life experience that older workers contribute. 61% of older workers had taken advantage of up-skilling training at their workplace. It’s become a common thing, as 12.9% of Australians older than 65 are still in the workforce and that number is expected to rise.
Ms Loane added, “The good news is that age discrimination towards older workers has more than halved to 13% in this year’s survey compared to 28% in 2012.” 41% of respondents said they expect to be paid exactly the same as an employee of any other age.
Flexible working arrangements have enabled many older workers to continue working while creating a healthy work/life balance. 55% of older workers would prefer to work part-time for their remaining work life. Job satisfaction is still our key driver, with 31% of older workers applying for a new job after turning 50.
7% of all respondents said they were concerned about the lack of jobs and the difficulty of finding another job if they were let go. In fact, 17% of workers had been made redundant since they turned 50. Males were more likely than females to apply for a new job if they were made redundant.
Many people look at the pension age to decide when they should retire. In Australia, the age pension is available from the Department of Social Services from 67 years old unless you were born in 1953 or earlier. This year’s survey shows that many people are now working until 75 years old, but we’re lucky to live in a country where you might be eligible for a pension if you can’t continue working.
The Older Workers Report is a national survey of older workers and employers, and is now in its third year. To download a copy of the 2015 Older Workers Report or watch the video interviews, please click here.
What does this mean for your superannuation?
The benefits of working longer mean more money at retirement. It’s a double benefit – not only are you not accessing your superannuation quite as early, but you’re also putting more into it – a win/win. So what could the potential difference in retirement nest egg be for someone retiring at 70 rather than 65?
That depends how much you earn, how much your currently have in superannuation and the earning rate of that money, but as an illustration, a 30-year-old person on a current income of $50,000, with $20,000 already in superannuation and a super earning rate of 7% per annum could potentially expect the following super nest egg:
|Retirement Age||Super Fund Amount||Avg Super Fund Accumulation/Year (From 30 Yrs of Age)|
That assumes superannuation guarantee payments of 9.50% and no other contributions. Remember, this is just an example. Small changes in the amount you earn, the fees you pay and the investments you hold within your super fund can make a big difference to your retirement funds.
If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.
Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group you selected.
Superannuation Guarantee responsibilities
Australian employers are required by law to pay a portion of your salary or wages into a super fund for you if you are one of their employees, aged over 18 years old or over, and earning $450 or more per month before tax. At minimum, they must pay 9.5% of your ordinary time earnings into your super fund. This money is known as super guarantee contributions or concessional contributions.
You can contribute some of your own money to your super fund if you want to see it grow faster. This is called a voluntary contribution. If you make a voluntary contribution and you do not earn much money, you may be eligible for the government to make a co-contribution of up to $500.
If you do not earn much money, you may also be eligible for the government to add to your super with a low-income super contribution (LISC). The LISC and co-contribution are both automatic payments that are made once you lodge your tax return, if you are eligible.
Please visit the ATO’s website if you would like more information about your employer’s SG responsibilities to you as their employee, or for more information about your SG responsibilities as an employer.