Today’s retirees are living longer,more physically active lives,less restrained by the conventions of age.Credit:Getty
For a start,they’re living longer than previous generations. Back in 1908 when our forebears formulated the old age pension,life expectancy was 55 for a man and 58 for a woman. Today,it’s 80 and 84,and climbing:by 2050,Australia will be home to 50,000 centenarians. But living longer has a dark flip side:concern that we might not be able to afford to.
“A terrific way to not worry about your retirement money is to die,” deadpans Paul Clitheroe,money expert and chairman of the federal government Financial Literacy Board. “We’re stressed because of the wonderful lifestyle that the vast number of us are leading:how will we carry on funding it when we stop working?”
Planning alleviates anxiety,he says – and it’s easy. “Write down on the back of an envelope how much you need to live for a year. How much to run your car? The house? The little tin boat you go fishing in? How often do you want to go overseas? That’s your annual budget. Multiply that figure by 17 and boom – that’s your capital target. Then have a look at how much super you’ve got.”
According to the Association of Superannuation Funds of Australia,the yearly budget for a couple wanting to retire “comfortably” is $62,000,and $44,000 for a singleton. A “modest” allowance is $40,000 (couple) or $28,000 (singleton). Meanwhile,the average superannuation balances for retiring Australians in 2015-16 were $270,710 for a man and $157,050 for a woman. Even taking into account the built-in comfort of the Age Pension,it’s not hard to see why one-fifth of Australians aged 45-plus in the workforce who hope to retire eventually are planning on working into their 70s,while almost half – 40 per cent – still don’t know when they’ll be able to hang up their boots.
“I think for a lot of people,super just felt like another form of taxation,” says Tim Steele,head of retirement and investment solutions at MLC. “They preferred to have the cash now rather than tomorrow because the concept of deferred benefit can be tricky to grasp. But when they gain an understanding of compound interest – ‘the eighth wonder of the world’,as Einstein described it – they wish they’d put more away earlier.”
Part-time work is increasingly transitioning people into retirement. Those extra few dollars a week not only take the strain off any investment money waiting in the wings,but research shows that older Australians who keep themselves mentally engaged and connected to their communities stay healthier longer. In the US,where as many as one-third of retirees are willing to work part-time,more organisations are offering flexible hours and part-time positions to leverage a workforce that’s loyal,reliable and experienced.
Twelve years ago,three-quarters of 70-plus Australian women had never had superannuation coverage. By 2017,the situation had improved,but the trend highlights an ongoing vulnerability. The number of women aged 60-64 in the workforce has nearly doubled in a decade (now at 44 per cent),according to the Australian Institute of Health and Welfare.
“Men typically die earlier than women,” Clitheroe says. “Factor in midlife divorce and there’s every chance of an older woman finding herself alone. What we’re seeing clearly now is younger women starting to take responsibility for their own financial futures. They’re not going to rely on a bloke.”