Posts Tagged “experience matters”

Some people find retiring hard to do

By MICHAEL LAURENCE
There is a fast-growing global trend for people to remain in the workforce well past traditional retirement ages. | Illustration: Carolyn Ridsdale

There is a fast-growing global trend for people to remain in the workforce well past
traditional retirement ages. | Illustration: Carolyn Ridsdale

Some older workers find retiring hard to do. With the right financial advice and lifestyle adjustments, they can continue to work – and it can even prove good for their health.

Jenny and Peter “Herb” Gardner have created what many would regard as an idyllic transition to retirement on their organic vineyard in Canowindra, 300km west of Sydney.

In a textbook example of long-term planning, the Gardners bought the land 13 years ago, planted their first grapes that same year and then built a straw-bale house clad in local clay.

The first vintage of Gardners Ground wine was produced within three years.

Meanwhile Jenny, now 67, and Herb, 70, progressively shed their Sydney life as they became more confident that the “experiment” was working: they sold their inner-city home and eventually their medium-sized industrial business.

Having worked hard throughout their lives, the couple now work about 15 hours a week.

They grow the grapes, organise the wine-making and market their expanding range, calling on professional help and labour when needed.

The Gardners are representative of a fast-growing global trend for people to remain in the workforce well past traditional retirement ages, often reducing their workloads and switching, if possible, to occupations that reflect their personal interests or passions.

A special report this year on the world’s ageing workforce by The Economist magazine’s Intelligence Unit predicts: “Retirement, as experienced by post-war generations, could soon become a thing of the past.” And it seems many workers would welcome the change.

The report, commissioned by human resources and financial consultancy Towers Watson, points to European Commission research suggesting that a majority of Europeans find the prospect of working part-time and receiving a part pension preferable to full retirement.

Certainly, the broad drivers of this trend to working into old age are greater longevity, generally inadequate retirement savings and pressure on government age pensions.

In their late careers, people often want to do what they were once so passionate about in their early careers.– Alison Monroe, Sageco

Yet it appears, at least anecdotally, that increasing numbers of older people, including those with substantial retirement savings, are finding work a more fulfilling way to spend their time than being on a beach or golf course.

The latest Australian Bureau of Statistics’ (ABS) Retirement and Retirement Intentions report shows that one in five working Australians over age 45 intends to retire at 70 or older.

Thirteen per cent never intend to retire while another 8 per cent haven’t made up their minds if they will ever retire.

By contrast, the ABS reports the average retirement age of those who retired in the past five years was 61.5 years.

Research reports and media articles tend to focus on how employers can make the most of an older workforce.

Somewhat overlooked are how individuals can best prepare themselves for working past popular retirement ages and how to make the most of the potential health and financial benefits of a longer working life.

Career coach Alison Monroe believes individuals preparing to work beyond traditional retirement ages should create a “life plan” that candidly sets out the state of their health, their personal finances and their career.

And then the plan should set out their aims to make the most of their circumstances.

Monroe, group chief executive of career consultancy Sageco, is a specialist in guiding the careers of an ageing workforce.

When drafting their plan, Monroe suggests that older workers take into account:

  • Health: Question whether you have the physical and mental agility for your present job. Should you consider a less demanding role? Should you take advice about how to improve your health – looking at exercise, stress, diet – to increase your work longevity?
  • Money: Look at your financial position, goals and commitments. And Monroe asks clients: “What does your bucket list look like and how are you going to fund it?” She typically suggests that clients see a financial planner to get a financial plan.
  • Career: Ask yourself some “powerful” questions about how your career is going, Monroe says. What aspects of your career are working well? What could be working better for yourself and your employer? What do you no longer feel skilled in or passionate about? And what work would you love to be doing? With answers to such questions, she believes older workers can create a vision for their future careers.

“In their late careers, people often want to do what they were once so passionate about in their early careers,” Monroe has found.

“But their careers have moved onwards and upwards. Sometimes, it is about designing a role to use your skills and passions even if it may mean giving away managing a team of 60 and a A$100 million budget.”

For some senior executives, the obstacle to taking on a less stressful role and working fewer hours a week is their unwillingness to take a pay cut.

Monroe suggests that executives wanting to keep working until an older age, yet at a slower pace, should be flexible about their remuneration to ensure that they will still offer employers value for money. “Don’t be greedy,” she advises.

With people living longer, the financial abuse of elders is becoming a worrying issue for accountants.

Dr John Lang, director of workplace health consultancy John Lang & Associates, agrees with Monroe about the importance of good health for those intending to work into their sixties and beyond.

He suggests that people with ambitions to work into old age adopt a practical strategy to slow the inevitable physical and cognitive deterioration from growing older.

Lang says the fundamental approach is easy to articulate – eat well, keep fit, manage stress and don’t smoke – but it is difficult for many to implement in middle age if they haven’t developed good habits throughout their lives.

He is convinced that a fit 60-year-old will outperform an unfit 40-year-old

in any standard test of cardiovascular fitness. And Lang emphasises that productive and enjoyable work is actually good for your health.

Financial planner David Rolleston CPA advises typically high net-worth clients who generally intend to keep working past traditional retirement ages – even though they can well afford to retire.

Rolleston, executive director of UBS Wealth Management and a member of CPA Australia’s Retirement Savings Centre of Excellence for retirement savings, says very few of his older clients want to spend their time “sitting on the beach 24/7” or repeatedly travelling the world.

His business-owning clients usually have no intention of ever retiring, while his clients who had careers as corporate executives usually change their work patterns before reaching 65, perhaps taking part-time work or doing something less stressful.

“My experience is that those clients who had retired early, certainly before 65, are generally finding that retirement is not for them,” Rolleston says.

“They miss the work environment so may take up board directorships and/or work with charities.”

Rolleston is finding that more of his clients still only in their forties and fifties are taking a step that is likely to eventually extend their working lives.

“They are taking six to 12 months out of the workforce,” he says, “to travel with the kids overseas or in a campervan around Australia. It recharges their batteries.”

His practical financial planning pointers for anyone considering working beyond 65 include maintaining contributions to superannuation and regularly moving superannuation savings from a so-called accumulation account into a superannuation pension account where fund earnings are not taxed.

He suggests that older working couples adopt strategies to ensure that their superannuation savings are balanced as evenly as possible between spouses.

This is as a precaution in case the law changes to tax earnings of superannuation pension accounts or superannuation pensions (which in Australia are tax-free for people aged over 60).

Reluctant retirees

Rolleston believes that working past popular retirement ages provides a “critical” opportunity to try to pay off any debts. “You don’t want to go into retirement with debt – it is very hard for retirees to get out of.”

Michael Rice, chief executive of Rice Warner, which specialises in wealth management research and advice, says individuals can potentially boost their eventual retirement income by perhaps 20 to 30 per cent by retiring at 70 rather than 65 – depending on the circumstances.

This is because their superannuation will benefit from five more years of contributions and five more years of earnings to finance what will be a shorter and therefore less costly retirement.

Rice, whose studies include adequacy of retirement savings and workforce participation, is emphatic that older workers need to “remove the mindset about a need to retire” on becoming eligible for the age pension.

He agrees with Monroe that a practical step older employees can make to extend their working lives is to critically examine their skills and to perhaps re-evaluate their worth to an employer.

“You might be earning A$200,000 a year,” Rice says, “and you may realise that you are slowing down.”

Rice suggests that older employers consider the option of approaching their bosses with a proposal to work for, say, another five years or so in return for a lower salary that reflects their perhaps reduced productivity.

“Then the employer probably gets better value for money, and you don’t have that terrible conversation where the boss says: ‘you are not as good as you used to be’.”

And here’s a final couple of tips from industrial businessman-turned-vigneron Herb Gardner for older individuals who want to make a working tree-change by setting up their own enterprises in the bush.

“Make sure you go to a district where there are professionals and qualified labour to call upon for the various parts of your business,” he says. “And look for somewhere with people who appear to reflect your desired lifestyle.”

The Asian way of retiring

Ambitions of retiring to a beach house and watching the waves break are not “culturally prevalent” among the older professional and business-owning clients of Singapore-based remuneration adviser Jon Robinson of Freshwater Advisers.

He says his professional clients tend to leave their partnerships in their mid-fifties or early sixties and take on a portfolio of assignments including company directorships. His business-owning clients remain with their enterprises into very old age.

The An Ageing Australia: Preparing for the Future report by Australia’s Productivity Commission points out that by 2060, one in eight Japanese will be aged 85 or over – compared with Australia’s projected one in 17.

In China today, only 8 per cent of Chinese are over age 65. By 2060, more than 28 per cent of its population will be over 65. And almost a third of Singapore’s population is expected to be over 65 by 2040.

Robinson says most Singaporeans who held senior positions would have adequately saved for their retirement. “[But] they are culturally driven to want to keep on working. They want to remain engaged and economically productive.”

Robinson has advised the Hong Kong and Singapore governments on their retirement policies.He says Singapore’s Central Provident Fund provides an “absolutely subsistence” income in retirement.

The position is similar with Hong Kong’s scheme, which is newer. “If you want more than that, you should have saved your own money or will have to keep on working,” he says.

Personally, Robinson, who has just turned 55, intends to keep working for as long as he can. “I find work stimulating and intellectually satisfying; it is how I prefer to spend my day. Money is not the primary motive.”

Andrew Heng, executive director of Baker Tilly Malaysia, says his professional clients tend to remain working for as long as possible.

Many give priority to providing their children with an overseas education in Australia or the UK over their retirement savings.

His higher net-worth clients with their own businesses typically keep working into their old age, perhaps “unsure of what to do if they didn’t work”.

Financial abuse of elders

With people living longer, the financial abuse of elders is becoming a worrying issue for accountants.

In Australia, adult children, particularly adult sons, are the most common perpetrators.

Financial abuse isn’t necessarily outright theft; it’s when someone illegally or improperly uses a person’s money, assets or property. It can include:

  • Misappropriation of property, money or valuables
  • Forced changes to a will or other legal document
  • Denial of the right to access personal funds
  • Forging of signatures – on bank accounts or legal documents
  • Misusing enduring power of attorney
  • Going shopping for groceries and not returning the change

CPA Australia’s Victorian Third Age Network Committee is part of a taskforce that, in conjunction with CPA Australia, will develop tools for accountants to more easily identify financial abuse of elders, assist their clients to find help, and prevent it occurring in the first place.

Identifying financial abuse is important, both for the victims and for public practitioners avoiding the risk of a negligence action. Accountants should be sensitive to any changes in a client’s behaviour or financial situation.

“Signs to look for include a client wanting to transfer assets unexpectedly, or if they are always accompanied by a family member to appointments, which may prevent honest conversations,” advises Sue Hendy, CEO of Australia’s Council on the Ageing.

Accountants should also consider that family relationships change. “Relationships and households can break down,” says Sue Marshall, general manager of Victoria Plus at Victoria University.

“If it was a business relationship, people in professions like accounting would ensure that certain safeguards were put in place.”

The elder financial abuse website and toolkit is scheduled for release in mid-2015 (look for it on cpaaustralia.com.au).

Until then, go to myagedcare.gov.au and do a search for “elder abuse concerns” for a contact list of relevant bodies.

Further reading

Access the following CPA Library items online at www.cpaaustralia.com.au/retireguide

The New Retirementality: Planning your life and living your dreams … at any age you want (eBook)

For Old Times’ Sake” by Rick Morton, The Australian, Apr 15, 2014

Older and Wiser” by Peter Garber, T+D, 2013

This article is from the November 2014 issue of INTHEBLACK.

 

Rick Brimeyer

 

Posted: Thursday, November 6, 2014

According to the Bureau of Labor Statistics, the number of workers 55-64 years old working is almost four percent higher than it was prior to the Great Recession.

The number of 65 and older workers is also up, but less than 1 percent.

Meanwhile, the number of younger workers is trying to recover to pre-recession employment levels with 35-44 year-old workers down 3.6 percent and 45-54 year-olds down 2.3 percent.

Some of the growth of older workers can be explained by the huge baby boomer pool holding on to their jobs and simply aging into the 55 and older category during the past seven years.

In addition, boomers are tending to work longer than prior generations, due to improved health, longer life expectancies, fewer traditional pension plans and perhaps less-than-stellar retirement planning.

This demographic phenomenon is being used to explain various economic trends:

* Tepid employment growth and underemployment among younger workers.

* Stagnant wages due to the larger labor pool and older workers being less likely to leave a job for higher pay.

* Continued low bond yields despite the Fed reducing its aggressive bond buying program as older investors pick up the slack in the bond market as a means of paring risk in their portfolios.

The intent of this column, however, is not to debate the impact of senior workers on the economy. Rather it is to discuss the intangibles that they can bring to your work team.

Too often, especially in organizations where pay is calculated primarily as a function of seniority, management sees experienced workers’ premium pay as a prime target for cost cutting.

That might be justified in cases where a low performance issue has been allowed to fester for years or if someone is coasting toward retirement.

But it’s a mistake in cases where highly experienced employees are engaged, learning and performing.

By definition, experienced workers bring experience. They’ve ate, slept, lived and dreamed about the technical aspects of the job. They are able to differentiate between the few vital aspects needed to make things run smoothly and all the myriad of other factors that are simply noise.

Long-term employees personify loyalty. As young employees attend the 25-year work anniversary for an admired co-worker, they’re likely to be thinking, “Wow! She’s been working here longer than I’ve been alive. She’s talented and certainly has other options. I made a good decision by joining this organization.”

Senior employees also bring perspective. During the tumultuous times of my career, I searched out respected, gray-haired colleagues to help make sense of things. Their experience with inevitable economic cycles, career highs and lows was invaluable in helping me see the bigger picture.

Thus, experienced employees also can bring a sense of stability to the team. They tend to ride a smoother roller coaster than their younger counterparts. That steadiness and consistency can be a welcome attribute in a work environment that is constantly changing.

Here’s a few thoughts for my fellow boomers on how to be that valuable resource for younger workers:

* When seeking advice, others usually aren’t looking for an answer. Rather, they’re looking for someone to listen and ask probing questions they haven’t yet considered.

* While younger workers might appreciate your ability to learn from the past, they don’t need you to replay it. Share the lessons, not the detailed war stories.

* Keep learning and applying new knowledge. You’re not likely to be sought out if you’re talking about “the plant expansion project that I led back in ’85.”

As 2014 grows long in the tooth, it seems an appropriate time to recognize those senior co-workers who have played a significant role in your career or within your organization through their dedicated service.

Balance needs to be struck to ensure younger workers can access skilled jobs.

Australia is facing a unique challenge with its ageing workforce and must work to ensure a good talent pipeline to highly skilled jobs in order to remain competitive says Hays. This warning has come as the recruitment company notes that an ageing workforce and delayed retirement means older workers are staying longer in highly skilled jobs. The danger is that this trend is restricting younger talent from accessing these more challenging roles.

“Over the past decade, successive Australian governments have recognised that increasing the labour force participation rate of older people is a way to help soften the economic impacts of an ageing population,” notes Nick Deligiannis, managing director of Hays in Australia & New Zealand. “While older workers have always been an important part of the Australian workforce, in recent years the importance of this contribution has grown. Research from the Australian Bureau of Statistics shows the labour force participation rate of Australians aged 55 and over has increased from 25 per cent to 34 per cent over the past 30 years, with most of the increase occurring in the past 10 years.

“It therefore makes sense to retain mature age workers for as long as possible,” he continues, “but we must not do so at the expense of training and developing new entrants to the labour market. If we look to the future, in order to maintain our competitive edge we need to ensure the country has a future pipeline of talent who have the skills and experience necessary to replace our ageing workforce when they do eventually retire. Otherwise there will be a skills vacuum that will take many years and a huge amount of investment to fill.”

Deligiannis believes employers have to strike the right balance between retaining highly-valued, well educated and experienced older workers, and recruiting and developing the next generation of employees. Ultimately, of course, the focus should be on the recruitment, development and training of staff at all levels and of all ages.

“The ongoing training and development of competent people – of all ages – is essential to the future success of businesses,” concludes Nick. “After all, organisations need to ensure their workforce continues to evolve to changing market conditions. And when someone does decide to retire, they need to have suitably trained and experienced professionals to replace them.”

 

Source;  Global Recruitment

Older workers — those who are at or approaching the traditional retirement age of 65 ­— are the fastest-growing segment of the workforce and one of the fastest-growing groups in the overall population. In the U.S. the number of individuals aged 65 or older will increase by about 66% between now and 2035. The growth is driven in part by the Baby Boomer generation, but even more so by an increased life expectancy that’s creating more healthy years for more people.

As we learned in our research for our bookManaging the Older Worker, people who are 65 today have about the same risk of mortality or serious illness as those who were in their mid-50’s a generation ago. The percentage of the population over age 65 who are at serious risk of mortality or life-threatening illness will grow by only about 16% between now and 2035, which means that there will be a huge cohort of healthy individuals in that age group who want and need to work. These changing demographics will transform the U.S. labor market and society as a whole. Any employer who wants to engage a skilled, motivated, and disciplined workforce cannot afford to ignore them.

And yet, these workers are being ignored to some extent. About three quarters of individuals approaching retirement have for some time said that they would like to keep working in some capacity, yet only about a quarter of them actually do. Something is keeping them from working, and that something is on the employer side.

Engaging the older workforce should not be such a big challenge. Older workers tend to be in the workforce because they want to be — relatively few look for jobs because they need them to survive. (During the Great Recession we heard a lot about people not being able to retire because of finances, but we’re hearing that less now.) Older workers want to keep working first and foremost because it keeps them engaged with other people, and also to feel as though they’re contributing. Money is further down the list. Older workers also know what they are getting into and what is required when they accept a job — much more so than younger workers.

So, why aren’t we seeing more older employees in the workforce? The problem seems to be getting them in the door in the first place. Discrimination is certainly one reason. Evidence suggests that we are more biased in our views of older individuals than we are of minorities and women. It’s easy to see that bias if we compare the images that come to mind when we contrast the words “older,” which brings up negative stereotypes, and “experienced,” which brings up positive ones.

The other challenge is fear. Younger supervisors are often afraid of managing older employees because these older workers have more experience than they do. The less experienced managers may wonder, “How can I say, ‘Do this because I know best’ when often I don’t know best?” Older workers may also have some initial trouble being managed by younger supervisors, especially those with less practical experience than they have. But it’s up to supervisors to shape the relationship beginning with the first interaction by saying how they want to use the older worker’s experience, while pointing out what their own responsibilities are for setting goals and holding people accountable.

It’s not just a confidence issue. Younger supervisors may find that what works with most of their staff doesn’t work for older employees. They aren’t as fearful of being fired (they’re already at retirement age) and they have less interest in promotions or a big payout in the future.

So how do you keep an older worker engaged? Start by acknowledging and using their experience. Certainly this is true for any age group: Everyone wants their expertise to be recognized, especially by the boss. But with older workers, it’s even more important, because they typically have a lot of experience — so ignoring it is especially irritating. And older workers themselves can be prickly about being managed by someone who knows less than they do.

The military has developed some good tactics for recognizing and appreciating older workers’ expertise based on the efforts of generations of junior officers fresh out of college and struggling to manage older, more experienced sergeants. Military leaders now advise those officers to treat their experienced subordinates as partners, at least behind the scenes.  The supervisor is still in charge, but he’s missing an opportunity (and is more likely to make a mistake) if he doesn’t check in with his more experienced subordinates — at least to hear their thoughts — before making important decisions. The supervisor still sets the goals and holds people accountable for meeting them. But the subordinates have a big say in the execution, and when they walk out of their private meetings with their managers, they need to be on the same page.

In the workplace, it’s useful to check in with individual older workers to ask them what problems they could foresee in executing a specific task (“Here’s what we need done”). If you don’t take any advice they offer, it’s helpful to explain why not (“I know it’s an aggressive deadline, but it’s important to finish this before the new manager takes over”).

In terms of their interests, older workers tend to be more like young workers than like their middle-aged peers. Their big financial needs are typically behind them, work is often a source of social interaction for them, and they care more about the good works that their employer might be doing than the cohorts in middle age. Supervisors should consider giving older works jobs with more customer interaction (frontline jobs) or those dealing with internal customers.

Research also suggests that putting older and young workers together helps both groups perform better. They make good allies in part because of their similar interests, but because of their different stages of life, they are less competitive with each other than workers in the same age cohort might be. That means that they are more likely to help each other and to form good teams.

The bottom line is that companies looking to increase engagement, performance, and loyalty need to do a much better job of engaging this growing — and valuable — segment of the workforce. For employers who say they want a workforce that can “hit the ground running,” that doesn’t need training or ramp-up time to figure out what to do, that will be conscientious, and that knows how to get along with others, older workers are the perfect match.

More blog posts by 
80-peter-cappelli

Peter Cappelli is Professor of Management at the Wharton School and the author of several books, including his latest, The India Way(Harvard Business Review Press, 2010).

Searching for work when you are 50 years+ can be daunting, frustrating and deflating. I talk to people on a weekly basis about this issue and their comments are always the same:

  • “I’ve got all the qualifications, why can’t I get an interview?”
  • “Why doesn’t anyone see my experience as a positive?”
  • “Employers are only seeking young people!” 

It is a tough market, but its tough for jobseekers at every level. Reality TV shows have mastered the art of shocking people into action by measuring their actual age against their physical age or mental age etc. It’s a wake up call for many. Imagine being told as a 35 year old women that you have the physical age of 48 years! Yikes!

Job seekers in the 50-something category could benefit from a ‘job seeker age test’. How old are you based on the content of your resume and comments made to employers? Many of you would be quite surprised by the results.

In my experience there are a number of mistakes mature job seekers make without realising it, that are far more damaging than their perceived idea of racism based on age. As a mature job seeker you have to ‘modernise’ your approach to compete in today’s market, not only in your resume, but your attitude as well.

Many mature jobseekers start their search with a pre-determined idea that no one will employ them because they are over 50 years. Self defeating thoughts will not help your cause. Sure, there are organisations that prefer younger employees, and sadly some that do discriminate, however, there are a number of companies who value the wealth of experience mature candidates offer.

I know a medium sized organisation here in Western Australia who actively seeks mature age candidates. In the Managing Directors own words “we prefer 2 part time mature employees to 1 full-time person. We’ve found their work ethic, output and longevity is much better than their younger counterparts”.

When it comes to staying young, a mind-lift beats a face-lift any day. 

 ~Marty Bucella

As a mature job seeker you need to ask yourself how you present to an employer. Do you come across as confident, happy and motivated? Or have you become cynical, a product of your self-defeating thoughts?

  • Do you call people ‘pet’, ‘lovey’ or ‘dear’?
  • Have you made statements like “back in my day” or “way back when”?
  • Is your resume as thick as a novel because you’ve included every position ever held?
  • Are you including your date of birth, social security pension card number, dates of high school education and qualifications?
  • Do you hand deliver applications despite the employer’s request for emails because you hate using the computer?
  • Are you still submitting resumes that read like job descriptions because “they always worked for me in the past”?
  • Do you rely on print media to source vacancies because you aren’t a computer person?
  • At interviews have you asked how old other staff are to determine if you will have to work with “whipper snappers”?
  • Do you give the impression at interview of wanting to take over? Eg. “I can teach him a thing or two with all my experience”
  • Are you positively selling your experience … “I have a great deal of experience and skills which I can share with the team” as opposed to “I could teach these young pups a thing or two!”
  • Do you make excuses for your age … one of the worst I ever heard as a recruiter was “I know you probably want someone younger” … this was during the interview  – she already had one foot in the door!

Your attitude counts for a lot and will affect people’s impression of you. Be aware of your thoughts and focus on the positive aspects rather than the negative. I bet your job seeker age goes down in the process.

 

Michelle Lopez, Owner/Career Consultant

w: www.one2oneresumes.com.au

 

Date: November 1, 2014 
Ross Gittins

The Sydney Morning Herald’s Economics Editor

<i>Illustration: Glen Le Lievre</i>

Illustration: Glen Le Lievre

Politicians and economists have been banging on about the ageing of the population for ages, but how much do we actually know about the likely economic consequences? Not much – until now.

We’ve been told incessantly that ageing spells bad news for the budget – greatly increased spending on pensions and healthcare – with ageing used to help justify the harsh spending cuts proposed in this year’s budget.

In truth, it has suited the powers-that-be to exaggerate ageing’s effect on the budget. And oldies are right to resent the way ageing has been presented as nothing but a terrible problem. If the fact that we’re living longer, healthier lives is a “problem”, it’s the best kind of problem to have.

So let’s ignore the budget and focus on ageing’s other economic consequences, some of which are good. We’ll do so with help from a speech given last week by Dr Christopher Kent, an assistant governor of the Reserve Bank.

Kent says population ageing is driven by three factors: the boom in babies in the early years after World War II (1945 to 1960), the subsequent sharp drop in fertility rates that created a baby-boomer bulge, plus rising longevity thanks to decades of prosperity and advances in medical science.

The authorities have been warning about the coming consequences of ageing for so long – and how bad it will be by 2040 – that I suspect many people have given up waiting for it to start.

Well, get this: although it’s got a long way to go, it’s already started. The baby boomers have been retiring since the turn of the century, thus reducing the share of the population that’s of usual working age (15 to 64).

Kent says that, taken by itself, ageing is estimated to have subtracted from the labour force participation rate by between 0.1 and 0.2 percentage points a year over the past decade and a half. This effect has increased a little in recent years as baby boomers have begun reaching 65.

Point is, ageing’s biggest and most obvious effect is not on the budget, it’s on the labour market. Everyone alive contributes to the demand for labour, but only those of us willing and able to work contribute to its supply.

So ageing constitutes a reduction in the supply of labour relative to the demand. That suggests we can expect it to cause unemployment to be lower than otherwise (which is not to say it won’t continue to go up and down with the business cycle).

Since Australians have worried that there aren’t enough jobs to go around ever since the middle of Gough Whitlam’s reign, that sounds like good news to me. We’re in the process of switching from not enough jobs to not enough workers.

(What I wonder is how long it will take for our mentality to shift. The perception that there’s never enough jobs is now so deeply ingrained that any shyster with a profit-making scheme he claims will “create jobs” is greeted as a hero and demands that he be showered with subsidies.)

And with demand for labour stronger than supply, this implies upward pressure on wages. Again, sounds like good news to me. Kent adds that the converse of higher wage rates is lower returns to capital.

Kent points out that the pressure on labour supply will be felt most by industries that rely more heavily on labour, mainly service industries. Prominent among those industries will be aged care and healthcare, of course.

But, Kent adds, there’s likely to be scope for labour to be reallocated among service industries, with a lower proportion of young people meaning we’ll require fewer workers to care for and educate children.

There’ll also be relatively less demand for workers to produce goods. That’s for several reasons. First, because older people tend to devote less of their spending to goods and more services. Second, because all of us tend to spend an increasing share of our rising incomes on services. There are limits to our consumption of food, wearing of clothes and how many TVs, fridges and cars we can cram into our house.

Third, because of its greater reliance on machines, the production of goods is more amenable to continuous improvement in labour productivity than is the production of services. As one economist famously observed, you can’t improve the productivity of a quartet by reducing the number of players.

All this implies the prices of services are likely to rise relative to those of goods.

But now, gentle reader, if I’ve trained you well enough you’ll have noticed a weakness in my argument so far. I’ve described only the immediate effects of ageing – what economists call the “first-round effects”.

That’s where most people’s analysis stops, but economic analysis keeps going. One of the most important questions economists ask is: “And then what happens?” It’s the second-round and subsequent effects economics is supposed to illuminate.

Seen from an economist’s mindset, what I’ve described is a change in relative prices: the price of (or return on) labour relative to the price of (or return on) capital. The prices of services relative to the prices of goods.

Kent says it’s important that these relative price changes not be prevented from occurring. Why? So market forces can go to work on them, adapting to them, modifying them and, to some extent, reversing them.

The higher relative price of labour should encourage more middle-aged people to take jobs and more oldies to delay their full retirement, thus reducing the upward pressure on wages a bit. The higher relative prices of services should encourage more people to acquire the education and training needed to work in the services sector.

And greater longevity should encourage workers to save more for their longer time in retirement.

That’s what happens in market economies: things adjust.

Ross Gittins is the economics editor.

Source:  SMH

Date:  October 30, 2014

Ian Yates

This week the Federal government is again taking to the Senate a bill that contains its proposed changes to the age pension after redrafting earlier blocked bills.

The ALP Opposition has already waved through the freezing of the assets test for three years from 2017 in the House of Representatives and will do the same in the Senate. Compromises may emerge from the cross-bench on freezing the income test, slashing the deeming rate thresholds, and raising the eligibility age to 70.

The Prime Minister and his tense backbenchers must be concerned about the potential for political fallout because Mr Abbott took pre-emptive action this month and sent a personal letter to every age pensioner assuring them that what he was planning to do with the pension was OK.

Interestingly, in this letter the Prime Minister avoided mentioning the big-ticket item that pensioners are deeply concerned about – changes to pension indexation.

Pensions currently go up every six months by the higher of the increase in average weekly earnings, the CPI, or the Pensioner and Beneficiary Cost of Living Index or PBCLI. This ensures the pension keeps up with the real cost of living.

The government’s plans would remove both average weekly earnings and the PBCLI in 2017 and only index by CPI. Occasionally that would be all right because the CPI is the higher. But generally this is not the case. In fact only twice in the pastfive years has the CPI been marginally higher.

The Parliamentary Budget Office reports that by 2024-25 the proposed changes will reduce the total value of age pensions that year by $6.9 billion. That’s about $2000 a year less for a single pension, more than $3000 less for a couple in today’s dollars.

Why is the government taking such drastic steps and targeting pensioners – many of them Coalition supporters?

According to Treasurer Joe Hockey, it is all about avoiding the budget crisis precipitated by the advent of the ageing population.

Indeed the population is ageing. The population aged 65 plus will increase by 85 per cent between 2011 and 2031 and the percentage aged 65-plus will increase from 13.8 in 2011 to 18.7 in 2031.  That’s more people potentially on the pension and fewer  workers paying income tax to help fund it.

But the sky isn’t falling. We have known about our changing demographics for a long time and have built a pension system which is repeatedly named internationally as one of the most modest and sustainable in the western world. Our pension system costs government only two-thirds of the average for the OECD.

Yet we do have a superannuation system that provides high-income earners and wealthy retirees with very generous tax concessions – in some cases more than the equivalent of a full age pension.

When it comes to retirement, there are big winners and even bigger losers and it is all in the interplay of taxation, pensions and superannuation policies that creates this great inequity.

While the debate around pension changes rages on, the Financial Services Council has calculated that working Australians will have $128 billion less in their superannuation savings by 2025 following the decision to delay the 12 per cent superannuation guarantee.

If the government is so concerned about the sustainability of the pension in the long term why would they even consider a move to reduce most workers superannuation savings?

What is happening is that decisions are being made about pensions, superannuation and tax in a piecemeal way, in isolation, and without consideration for the flow-on effect they will have in other areas.

Instead, we urgently need the government to agree to an independent and comprehensive review of retirement income policy in Australia.

It’s time we got in the same room all the best minds who have looked at the ins and outs of current polices, and also talked with older people and other stakeholders, to discuss the best way forward, taking in the whole picture – pensions, superannuation, taxation and mature age employment issues.

Let’s take the current bills off the table and take a proper look at the best policies that will address the challenges and opportunities our ageing population. Policies that are equitable, co-ordinated and sustainable and don’t just entrench disadvantage for millions of older Australians.

Ian Yates is chief executive of  COTA Australia

Read more: http://www.canberratimes.com.au/comment/age-pension-changes-risk-entrenching-disadvantage-for-millions-20141029-11doob.html#ixzz3Hhh5H98Q

 

Declining infrastructure is behind staggering pockets of unemployment.

CENTRELINK OFFICE SYDNEY UNEMPLOYMENT FIGURES

Unemployment figures in some areas are at 50 per cent. Photo: AAP

 

 

Unemployment rates in some Australian suburbs are as high as 32 per cent, five times the national figure, creating pockets of disadvantage and leaving local councils scrambling to create jobs.

Both inner-city suburbs and remote towns feature in the top-10 areas grappling with high unemployment rates, with mayors saying they are struggling to provide jobs amid a decline in manufacturing.

Unemployment figures have skyrocketed in some suburbs in the past year, with Melbourne’s Broadmeadows and Brisbane’s Wacol both experiencing an almost 40 per cent jump in unemployment in 12 months.

• Find out the jobless rate in your area. Read the full report here

Broadmeadows in Melbourne’s north-west has an unemployment figure of 26 per cent, and has been rocked by the steady closure of local manufacturing since the global financial crisis in 2008, including more factory closures in the past year.

The current national unemployment figure is 6.1 per cent.

 

A source at the local Hume City Council said long-term disadvantage and the closure of the local Ford plant were to blame for unemployment in the area.

“The impact of the pending closure at the Ford plant in Broadmeadows, and the flow-on it has had on other supporting manufacturing industries has also played a part,” they said.

Unemployment rate map

Tasmania’s Brighton Council Mayor Tony Foster says high unemployment has been a problem in the Ravenswood area for generations.

His local government area currently endures a jobless rate of 23 per cent.

“The main thing that is going to turn this around is education but we can’t get kids to go to school any further than Year 7. There’s no thought of them even going to Year 11 or 12,” Cr Foster says.

“It’s a difficult area because there are few places like it in Tasmania. Other parts of the community are really vibrant and have high employment,” he laments.

The highest unemployment figure in Australia belongs to the indigenous community of Palm Island off the coast of Cairns, with unemployment at 49.8 per cent.

Ford factory closure Broadmeadows

Other remote towns such as Halls Creek in the Kimberley and APY Lands in South Australia both face unemployment rates of 42 per cent and 38 per cent, but languishing city suburbs aren’t far behind.

The new data shows suburban areas are not immune from staggering unemployment, as suburbs in Launceston, Melbourne, Brisbane and Adelaide also face some of the highest unemployment rates in the country.

The suburb of Elizabeth in Adelaide has the highest inner-city jobless rate in Australia with 32.4 per cent of locals unemployed.

City of Playford mayor Glenn Docherty warns this will only be made worse by the closure of the local Holden plant.

“We’re trying to get unemployment down across the city but from our point of view we have challenges with Holden closing in 2017,” says Cr Docherty, who is hoping horticulture can lift the area out of unemployment.

“We’re working with local food growers and training providers to secure work in a variety of entry level jobs in the expanding horticultural industry.”

Top five worst suburbs for employment state-by-state

QLD

Palm Island – 49.8 per cent

Aurukun – 32.1 per cent

Wacol – 26.3 per cent

Riverview – 23 per cent

Inala – 22.8 per cent

NSW

Lethbridge Park, Tregear – 23.2 per cent

Bidwill, Hebersham, Emerton – 22.8 per cent

Ashcroft, Busby, Miller – 21.7 per cent

Walgett – 15.4 per cent

Brewarrina – 14.6 per cent

VIC

Broadmeadows – 26.4 per cent

Campbellfield, Coolaroo – 22.9 per cent

Meadow Heights – 22.9 per cent

Dandenong – 20.8 per cent

Doveton – 19.5 per cent

TAS

Bridgewater – Gagebrook – 26.4 per cent

Ravenswood – 23.7 per cent

Rokeby – 16 per cent

Risdon Vale – 15.3 per cent

Invermay – 15.0 per cent

SA

APY Lands – 38.8 per cent

Elizabeth – 32.4 per cent

Smithfield – Elizabeth North – 23.6 per cent

Davoren Park – 19.6 per cent

Christie Downs – 19.4 per cent

WA

Halls Creek – 42.7 per cent

Roebuck – 31.1 per cent

Derby – West Kimberley – 20.7 per cent

Mandurah – 15.8 per cent

Balga – Mirrabooka – 15.3 per cent

NT

Yuendumu Anmatjere – 23.7 per cent

Sandover – Plenty – 22.5 per cent

Thamarrurr – 21.6 per cent

Anindilyakwa – 16.1 per cent

Tanami – 15.7 per cent

ACT 

ACT East – 15 per cent

Reid – 12.1 per cent

Florey – 6.9 per cent

Holt – 6.7 per cent

Belconnen – 6.2 per cent

Peter and Bev McNeil are enjoying their retirement at their Blue Mountains house, but man

Peter and Bev McNeil are enjoying their retirement at their Blue Mountains house, but many men have trouble adjusting. Picture: John Feder

SHIRLEY is bursting with energy. The 70-year-old Sydney woman has always embraced life, cramming her days with endless activities. She has a law degree, but worked part-time from when her children were at school and she became caught up in parents committees and running the tuckshop. She has now cut her work days right back, but has plenty to keep her busy, including evening meetings planning campaigns for local environmental issues.

It was fine while her dentist husband was busy with his own career but then he retired and the cracks started to appear. “Even if I prepare a meal for him in advance he drives me crazy ringing to see if I’ll be there to join him. He’s resentful that I still have so much on my plate, yet he never takes up my suggestions of things for him to do. I know he wants me home to do things with him but I don’t want my life shrinking.”

For all the jokes about men and women living on different planets, it’s the post-retirement period that lays bare the telling consequences of the way modern men and women live their lives.

That’s when the chickens come home to roost from men’s dependence on women for their social networks, the failure of many men to develop close, lasting friendships and their devotion to their careers, often at the expense of developing other interests and worthwhile ­activities.

The golden years burn brightly for many older women but for men they often splutter as they struggle with creating a meaningful life post-retirement. Once the lives of older women were dominated by the “empty nest” as mothers struggled to come to terms with the loss of their mothering role. But for years now, research has shown many older women are thriving. As noted feminist Betty Friedan explained in the book The Fountain of Age, “What the women experienced was increased activity, increased excitement, increased overall happiness, a decrease in depression and an increase in pride. No such change was found for men.”

Research shows that when Australian married men give up work they tend to come home to their wives, with the bulk of their social contact shifting from time spent with work colleagues to time with their partners. But many of the women move in the opposite direction — instead of increased time with their families they are out and about, enjoying friends and other social contacts.

“Retired women recorded a big increase in time spent with family/friends outside the household, while retired men recorded a decrease,” reports Roger Patulny, a sociology lecturer at the University of Wollongong, who analysed data on social contact in old age in the journal Family Matters.

Most of the time retired men used to spend with work colleagues now gets spent with their wives. Patulny: “After retirement men’s family time increases from 13 to 15.7 hours per day, while their daily time with friends decreases by nearly 20 minutes and with colleagues/acquaintances by over 2 ½ hours. By contrast, many women grasp the opportunity for more time spent away from their partners when they retire, increasing average time spent with non-­family members from 75 to 103 minutes a day.”

“Men are hit pretty hard by retirement because they haven’t ­really had the opportunity to diversify their social networks as much and then find themselves devoid of the one network they have constantly relied upon for years,” Patulny comments.

It’s hard on marriages, particularly because for men this stage of life was traditionally associated with a new drive for intimacy and closeness after his big career thrust was over. But a man’s new neediness is hardly welcome to the wife enjoying spreading her wings.

A longitudinal study conducted by Marjorie Fiske and colleagues from the University of California Medical School interviewed men and women before and after retirement and found retired women often made positive changes in their lives — like training, travel, more education — but many of the men were bored and isolated. Fiske: “The men got angrier and angrier as their wives over the years got more confident and began to do more things, instead of just taking care of them. The wives began to resent their husbands’ demands on them. The men simply got more and more depressed.”

Most men brush off the idea that they resent their wives’ new enthusiasms. “Every time I turn around she’s off again. Off to her choir one minute, then shopping, or a book club, then off to have coffee. It’s endless,” laughs Peter McNeil, 82, before hastily explaining that it’s not that he’s resentful of her busy life. He’s also a very busy man, he tells me, explaining the various discussion groups he’s involved in as well as taking a very active role in the Blackheath Men’s Shed. It’s just that sometimes there’s a problem when she’s off in their shared car, he says.

It was interesting how often older women list off a string of activities they are involved in — learning painting or pottery, attending university courses, writers festivals, book clubs, all sorts of stimulating activities, but ask their husbands what their wives are up to and they’ll mention shopping or the hairdresser. And talking … “I don’t know what these women find to talk about all the time,” one man grumbled to me.

Melbourne psychologist Dr Peter O’Connor sees many older men in this situation who react to their wives’ desire to pursue new interests with obstruction and objections. “There’s often a resentment fuelled by envy. The man finds himself with no one dependent on him and, even more frightening, he encounters his own feelings of vulnerability, loss of power and potency and increasing dependence. Sometimes these men defend against the anxiety generated by their wives’ changes by deriding and denigrating their activities, denying that they are doing anything remotely important,” O’Connor says.

In his book Facing the Fifties — from denial to reflection, O’Connor draws on important work by American geropsychologist David Gutmann, who wrote about the “crossover effect” where psychologically older men develop passive, nurturing or contemplative “feminine” qualities while older women acquire more bold, assertive, adventurous “masculine” qualities.

O’Connor says he’s watched many older women acquire a new zest for life as they make these changes. “It’s my turn,” they tell him as they move away from the “accommodating self” they used for so long to keep the peace in their marriages. O’Connor reports great conflict in some marriages as women pursue new interests while men flounder to re-create a meaningful post-career life.

“I often see retired men who are genuinely lost. They no longer see the point of life. They have always focused on problem solving, ‘doing’ privileged over ‘being’, and are ill-prepared for the chaos and uncertainty that comes with change,” says O’Connor, suggesting women tend to be more flexible, partly because women’s lives include more transitions and they learn to be adaptable.

It all leaves many older men playing more and more golf or making a fetish out of the size of their super. “Superannuation is like secular heaven, a rewarding after-work life,” jokes O’Connor, suggesting an obsessive preoccupation with retirement finances can be a reflection of a deepening anxiety about dependency and older age — issues men find hard to confront.

For single men, the problem of boredom and isolation looms even larger, with research showing they are much less active than partnered men. According to the 2012 Disability, Ageing and Carers survey, over a three-month period only 31 per cent of men in this age group living alone attended a movie, concert or other live event compared to 40 per cent of men with partners. Single men were less likely than partnered men to be involved with arts or craft, go to church or restaurants or clubs, be involved with voluntary activities, visit museums, art galleries or botanical gardens, participate in physical activities or attend sporting events or education groups.

“They are so boring! Bored and boring,” says one of my dating clients, Sharon, a lively 62-year-old Melbourne woman who’s spent much of the last decade looking for a mate. She’s met dozens of retired men through online dating who are often shocked by her busy schedule. A former physiotherapist, Sharon has found retirement has opened up endless opportunities for expanding her horizons. She jams philosophy lessons, art shows and anti-fracking meetings in between music and writers festivals, with her active social and family life filling in the few gaps.

She’s increasingly disenchanted about her chances of meeting a simpatico companion. “What is it with these men? They expect me to entertain them, to share my busy life and enjoy my friends, yet they have so little to contribute. They are often men who had interesting careers, big lives, yet when they gave up work their lives shrank to hitting little white balls into holes. And they have no friends. How’s it possible for a 65-year-old man to have no real friends?”

That’s all too common, says men’s health expert Steve Carroll. He’s spent more than 30 years travelling around rural Australia talking to groups of men about their health — conversations that often end up focusing on men’s relationships.

“For many men, the problem is their lack of real relationships. While they have a working life they have plenty of social contact, superficial banter with their workmates, although it is striking how rarely they actually see their work companions outside of work. But when they retire they lose their major source of social contact and they become increasingly dependent on their wives,” he says, mentioning a gregarious elderly former businessman who hasn’t left his house since his wife’s death three years ago.

They just don’t have the skill set to establish more meaningful relationships with other men, says Carroll. While he applauds efforts being made by the Men’s Shed Association to bring older men together for shared activities, he believes very little of the interaction taking part in the sheds translates into proper friendships. “That’s not addressing the problem of changing the male culture that leads to men’s isolation,” he says.

Peter McNeil admits this is true. He sees retirement for many men as like “turning off a tap”, denying men of their major source of a social life. But he acknowledges the type of relationships that develop in most sheds seem simply to replace the “working association” that men used to share in their workplaces, centred around superficial conversation concerning their joint projects, chat about politics or the football. “Nothing too deep. We rarely get into our personal lives, apart from some skylarking or banter about our wives — ‘Couldn’t have the car again yesterday because the wife was off having her hair done’, that sort of thing. It’s pretty rare that men develop friendships that extend beyond the hours they spend together in the sheds.”

Asked whether they’d ever talk about their wife leaving them or erection problems after prostate cancer, there was an audible shudder from a number of Men’s Shed participants. “There’s a few doctors in our group. We’d go to them about that sort of thing,” one commented dismissively.

Most women are still thrilled that the Men’s Sheds are keeping their men busy. “I was delighted when he got involved,” says Peter NcNeil’s wife, Bev, 77. “It meant I could go out without him saying, ‘You’re not going out again?’ ”

Privately, some of the wives admit they can’t understand how men can spend so much time together and know so little about each other. “Men are hopeless,” says a partner of one of the silent men of the shed. “I’ll ask him, ‘What did you talk about?’ Blank. Or ‘What’s so and so’s wife doing?’ Blank. We women are so different. We never shut up.” She mentioned a recent cruise with her husband where she got so bored with the one-sided conversation that she spent her whole time reading books. “I’d love a deep conversation,” she says wistfully.

“If you are not in touch with your feelings you can’t offer proper companionship and it seems to me that’s what women are now yearning for,” says Peter O’Connor, who believes men’s resistance to tuning in to their ‘inner life’ and sharing their feelings not only prevents close friendships with other men but lies at the heart of the demise of many long marriages.

While we constantly hear stories about older men dumping their wives for the younger woman it is far more common for men to find themselves turfed out of a marriage. The percentage of divorces involving men over 50 more than doubled between 1985 and 2010, from 11 to 22 per cent for men in their fifties and 4 to 10 per cent for men aged 60-plus.

A Family Court study by Pauline Presland and Helen Gluckstern back in 1993 showed women made the decision to leave in two-thirds of mature-aged marital separations. Australian National University professor Matthew Gray confirms this is most likely still the case: “Research from around the world shows women make the decision in most, around two-thirds, of all marital separations,” he says.

Of course, there are exceptions to these patterns, gregarious older men with strong friendship networks, males totally connected with their inner lives and keen to share them. Many experts working with men also see hopeful signs that younger men are learning to break down traditional mateship barriers. But elderly men are currently one of the key risk groups for suicide, which has led to new attention being focused on the failure of these older men to develop meaningful lives and strong social connections.

Last year BeyondBlue sponsored research that found the Men’s Sheds are reducing isolation of men, particularly in rural areas, improving wellbeing, promoting friendships and providing men with a new sense of ­purpose.

It’s a positive start, suggests David Helmers, executive officer of the Australian Men’s Shed Association. It’s a movement, he says, that has created an environment in which men can gather, socialise and share,” he says. That’s all good stuff, but in the meantime the busy women and bored men of our senior world will just keep rubbing each other up the wrong way. Harmony in the golden years seems a long way off.

Bettina Arndt is a social commentator and online dating coach.www.bettinaarndt.com.au


Ayers Rock. Source: Wikimedia Commons

Americans are quite familiar with the challenges threatening the Social Security system, with an aging population starting to retire and putting more strain on the shrinking group of workers paying the Social Security taxes that support their benefits. But America isn’t alone in facing a retirement crisis, and other countries are taking much more dramatic steps to shore up their systems for providing financial assistance to people in their old age. In particular, Australia plans to force its workers to stay in their jobs for years beyond their current retirement age in order to qualify for benefits — and it’s giving employers incentives to make sure older workers can get the jobs they need to hold out that long.

The Australian solution: Work until you’re 70
Australia has seen many of the same things happen to its old-age pension system that the U.S. has seen with Social Security. When Australia first implemented what it calls its age pension more than a century ago, only 4% of the nation’s population lived to the age at which they could claim benefits. Now, though, life expectancies have grown, with the typical Australian living 15 to 20 years beyond the official retirement age of 65. As a result, 9% of the Australian population gets benefits from the age pension, and the potential for some of those recipients to get support from the program for two decades or more has threatened the financial stability of the system. Currently, 2.4 million Australians receive about $35 billion in benefits from the program, making it the Australian government’s largest expenditure.

As a result, Australia has made plans to increase its official retirement age. Over the next 20 years or so, Australians will see the age at which they can officially retire climb to 70 if the plan is approved, putting the land down under at the top of the world’s list of highest retirement ages.

Iron ore mine in Western Australia. Source: Wikimedia Commons

When you just look at the age-pension portion of Australia’s retirement system, that sounds draconian, and plenty of Australians aren’t thrilled about the move. With a significant part of Australia’s economy based on extracting natural resources like oil, natural gas, coal, and various metals, the back-breaking work that many Australians do makes the prospect of staying on the job until 70 seem almost physically impossible. Proponents of the measure counter that argument with the fact that 85% of Australians work in the services industry, and many of those jobs don’t require the physical exertion that makes them impractical for those in their 60s.

Moreover, younger Australians worry about the need for older workers to stay on the job longer. Many fear a “jobless generation” of young adults who can’t get their older counterparts to give way and make room for them to start their careers.

What Australians have that the U.S. doesn’t
Yet before you bemoan the fate of the Australian public, it’s important to keep in mind that the age pension system isn’t the only resource they have going for them. In addition, Australians participate in what’s known as the superannuation system, under which employers are required to make contributions toward superannuation retirement accounts equal to 9.5% of their pay. Like American 401(k)s, employees are allowed to select investment options for this money, with default provisions usually investing in a balanced-fund investment. In addition, employees can make additional contributions of their own to their retirement accounts.


Source: Wikimedia Commons, courtesy Matthew Field

Over time, superannuation assets have built up impressively. As of June 30, assets in superannuation accounts rose to A$1.85 trillion. Australia is also seeking to have those fund balances rise more quickly by requiring more from employers on the superannuation front. Over the next seven years, the employer contribution rate will rise to 12%, accelerating the growth of this important part of Australians’ retirement planning.

Like 401(k)s and IRAs in the U.S., Australians can make withdrawals from their superannuation accounts at earlier ages than they can claim pensions. For those born before mid-1960, access to their retirement savings opens at age 55. That age is slated to rise to 60 over the next decade, but it will still give Australians access to money well before age pensions become available to help them bridge the financial gap.

Should America follow Australia’s lead?
Calls to increase Social Security’s retirement age have met with strong opposition in the U.S., and the Australian plan won’t change that. Yet without the backstop that superannuation provides, raising the retirement age to 70 in the U.S. would be even more painful for aging Americans. Some workers are fortunate enough to have employer matching and profit-sharing contributions that mimic what most Australians get from superannuation, but it’s rare for anyone to get anywhere near the 9.5% to 12% that Australian workers have contributed on their behalf.

Many see Australia’s answer to its retirement crisis as brutal, but given the aging population, it’s consistent with the original purpose of old-age pensions. If the U.S. wants to make similar moves, American workers need the same outside support for their retirement that Australians get — and that will also require more effort on workers’ part to save on their own for retirement.