Working until 70 a health struggle for over 20 per cent of us

The government wants Australians to keep working until they are 70, to reduce pressure on the aged pension, but new research shows that nearly a quarter of people now in their 40s will be too sick to stay in the workforce.

Treasurer Joe Hockey last year proposed lifting the age at which people are entitled to full access to their superannuation, known as the preservation age, from 65 to 70 for anyone born after January 1966.

In 2035, when the change would take effect, the majority of retired or unemployed Australians in their sixties will not have enough superannuation to fund their retirement.

Rather than simply working longer, we need to re-think our approach to retirement. Reaching a certain age shouldn’t mean we need to leave the workforce entirely.”: AMP chief customer officer Paul Sainsbury. Photo: Dean Sewell

Potential impacts of changes to the preservation age are a focus of a self-initiated research project currently being undertaken by the Productivity Commission.

“Rather than simply working longer, we need to re-think our approach to retirement. Reaching a certain age shouldn’t mean we need to leave the workforce entirely. Early years in retirement should be a transition period with reduced levels of work, giving people more time to focus on their interests and wellbeing, while still saving money,” AMP chief customer officer Paul Sainsbury said.

The AMP/NATSEM report concludes that if the pension age is raised to 70 many Australians will need to consider working longer to have an income and build more retirement savings, but this will be a problem for those who are no longer in good enough health to do so.

Working longer will be a challenge for one in five men and one in four women who are predicted to be in fair or poor health when aged 60-69 in 2035, the report finds.

“The good news is that Australians are living longer. But we know more years in retirement places more strain on our superannuation balances so it’s likely many of us will need to work longer. But this raises some confronting questions, in particular, how healthy we will be in the later years of our working life and what our financial position will be,” Mr Sainsbury said.

The report also finds that those people currently aged in their 40s who don’t consider themselves in good health now, are less likely to be well enough to still be working in 20 years time. The need to save more now is more urgent for this cohort.

More than 50 per cent of workers aged 60-69 are professionals. Manufacturing, electricity and construction sectors employ one in four men aged 60-69. The education and health sectors dominate the employment of women.

Australia’s self-assessed health status is ranked fourth in the OECD and similar to that for Switzerland, Sweden and the United States. Canada and New-Zealand are healthier than Australia.

“There is an important role employers can play to help re-design the workplace of the future so that older workers can stay at work for longer and transition to retirement in a way that suits them, while building wealth and income along the way,” Mr Sainsbury said.

Source: The Age Business Day

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