Posts Tagged “over 50 employment”
May 7, 2016
Paul Gilder Herald Sun
Events have combined to cast retiree nest eggs into the path of a financial tornado.
‘TOTO, I have a feeling we’re not in Kansas anymore.”
With those words Dorothy Gale, the heroine of cinema classic The Wizard of Oz, bravely takes her first steps into a foreign land full of uncertainty and risk.
Retirees and those soon to leave the workforce must be feeling a little like Dorothy this week after a run of events that have combined to cast their nest eggs into the path of a financial tornado.
The big banks set the scene as Westpac on Monday and ANZ a day later unveiled first-half earnings slumps and in ANZ’s case, a dividend cut, citing tough trading conditions and sending a shiver up the spine of yield-seeking investors.
It was the Reserve Bank’s turn on Tuesday, stealing the spotlight from Federal Treasurer Scott Morrison’s Budget by cutting the cash rate to an all-time low of 1.75 per cent in the war against deflation — leaving term deposit holders feeling even more unloved.
Perhaps the biggest whammy was in the Budget itself, with news of yet another overhaul to superannuation in the name of fairness and long-term fiscal repair.
Among changes set to be introduced from July next year, the annual cap on concessional — or pre-tax — contributions will be wound back from $30,000 to $25,000 for under-50s and $35,000 for over-50s.
For those earning $250,000 to $300,000, the tax rate on concessional contributions has been doubled to 30 per cent.
And the total a person can transfer into their pension fund — which attracts less tax than a super accumulation fund — will be capped at $1.6 million. It is estimated that those amendments will put an additional $2.9 billion into the government’s coffers over the next four years.
Combined, the revelations are turning the walk down the yellow brick road to a prosperous retirement into an arduous slog.
Remember, this is the generation who have been told that to be comfortable in their golden years, a couple aged around 65 will need to have about $59,200 a year to spend, while a single will need $43,100.
According to the Association of Superannuation Funds of Australia, a couple at 65 will need $640,000 to aspire to those annual sums, while a single will need $545,000.
Figures from the Australian Bureau of Statistics show men aged 55-64 have amassed on average $320,000 and women $180,000, while a household — which takes in the impact of single-occupant houses — has $400,000 in savings.
At those rates, many will be struggling to maintain that “comfortable” lifestyle well before their 75th birthdays, even with the benefits of the Age Pension.
Chant West head of research Ian Fryer says the gap is partly down to the relative immaturity of the compulsory super system, which has only been mandatory since 1992.
“It took a number of years for employer contributions to get to 9.5 per cent, so a lot of people nearing retirement aren’t going to get to those retirement savings levels,” Mr Fryer says.
While few are quibbling over the clamps intentionally being applied to the wealthy, economists are worried that more tinkering with super will further knock confidence in the system.
“The changes … still leave superannuation as highly tax preferred compared to alternatives,” AMP Capital chief economist Shane Oliver says.
“The concern though is that it will adversely affect the supply of patient long-term saving available to help grow the Australian economy.”
Respondents to the Westpac-Melbourne Institute’s consumer poll on the “wisest place for savings” has superannuation trailing the pack, favoured by less than 5 per cent.
Most favoured bank deposits, or paying down debt, while property was preferred by about one in five and shares about one in 10.
But the biggest long-term impact to wealth accumulation could yet come from interest rates.
The RBA also finds itself in a scary new world after official figures revealed Australia had joined the ranks of developed nations to suffer a bout of price deflation.
Announcing the RBA had taken the knife to the official interest rate this week, governor Glenn Stevens reasoned that “unexpectedly low” inflation — headline inflation was minus 0.5 per cent in the three months to March — was not to be dismissed lightly.
The hope is that in cutting rates, consumers will divert their mortgage savings back into the economy, and that extra demand will spur businesses to lift prices and reignite inflation.
But there is collateral damage, particularly for the reliable over-50s saver.
On hearing news of the rate cut, former Victorian premier and beyondblue founder Jeff Kennett labelled it a “disaster” for retirees.
“Low interest rates might be great news for homebuyers but for fixed income, more experienced Australians (who are) retired it is a disaster,” he tweeted.
Figures from RateCity.com.au, an online financial product broker, show the best term deposits on the market are offering about 3.3 per cent for one year, or about $6600 on a $200,000 deposit.
The big four banks are even stingier: rates of 2.3 per cent to 3.1 per cent are typical for anything up to five years.
“A lot of people are asking us where to park their savings when rates are low,” says RateCity money editor Sally Tindall.
“Online savings accounts are not offering a lot more than inflation, so the answer is often putting your money into a mortgage, which can be more productive in the long run.”
Mr Fryer says low returns have forced many people to take on more risk at a time when they have little recourse to recoup any heavy losses. For many, that means investing in Australian shares, and the big banks this week proved how stressful that path can be.
Lower rates, Mr Fryer says, can provide a sugar hit to shares but can also be a signal of difficult economic times to come.
Another obvious area of investment is property, after the government this week made good on its vow to leave negative gearing alone.
But Mr Fryer says would-be investors need to tread with caution.
“I’d be concerned if people were making investment decisions based on the current cash rate. They need to see if they can cope with higher repayments down the track.”
It seems that like Dorothy, anyone wanting to don a pair of ruby slippers in retirement might just need to do a little more legwork.
Australians approaching retirement age are braced for declining living standards under a system in which the rich have done better from superannuation rules, leaving the rest with insufficient savings or languishing on inadequate age pensions, a survey has found.
Many now back “root and branch” reform to address the problem, including calculating the family home in the age pension asset test and reducing the generous tax concessions for superannuation contributions by the well-off.
As the Turnbull government prepares to unveil its first budget, a survey of over 4000 Australians aged between 50 and 70 found this critical group of voters is profoundly nervous about the future, unconvinced about financial security and more inclined to reform than previously thought.
The online survey, conducted by the YourLifeChoices website, received 4004 responses to its 21-point questionnaire, conducted in the shadow of the politically pivotal 2016 federal budget to be tabled on May 3.
The results suggest the nation’s 5.5 million Baby Boomers are not the fixed conservative bloc that is sometimes assumed, and that worsening financial circumstances mean many would back policy options previously ruled out.
Among the findings is that 60 per cent of respondents either agreed or strongly agreed that a family home, if valued above $2.5 million, should not be excluded from the pension eligibility assets test.
“Perhaps the most surprising result in the survey, and contrary to expectation, is that the family home is no longer considered sacrosanct when it comes to the age pension assets test,” said publisher Kaye Fallick.
There is also support for changes to superannuation rules, suggesting super is not the political kryptonite it had been, as Boomers worry about the system’s financial sustainability and the need to protect fairness.
While many want a moratorium on changes, two-thirds of respondents believe reform of the superannuation system is required to wind back generous tax concessions, because they provide a disproportionate advantage to high income earners who are able to channel significant amounts of pre-tax income into their super accounts at a greatly discounted rate – thus costing the budget billions of dollars.
“Older Australians are not averse to change nor overly protective of all retirement assets and tax advantages, as much current ‘generational warfare’ hype might lead us to believe,” Ms Fallick said.
Sixty-seven per cent described changing the concessional rules on the accumulation phase of superannuation as something with which they either agreed or strongly agreed. Just 15 per cent classified the issue as not very important to them or not important at all.
The survey result suggests Labor is on to a winner with these voters with its policy of doubling from 15 per cent to 30 per cent the rate at which super contributions are taxed for those earning more than $250,000 a year. Currently the 30 per cent rate kicks in on contributions for those earning above $300,000.
Fairfax Media has reported that the government was considering going further than Labor in its pre-election budget by reducing the threshhold for the 30 per cent to $180,000, but that plan looks to have been dumped in favour of the $250,000 threshhold.
Underpinning the survey is a strong concern about the adequacy of the retirement system generally, with 82 per cent agreeing or strongly agreeing that the “root and branch” review is necessary.
By contrast, last year’s budget decision to continue pushing out the pension eligibility age from a projected 67 in 2023 to 70 by 2030 attracted strong opposition at 68 per cent.
But while Labor was onside with older voters on more heavily taxing super contributions for the well-off, its proposal to tax super earnings at a concessional rate for earnings above $75,000 in a year was not favoured – despite its negligible impact on all but the wealthiest superannuants.
Sixty-eight per cent disagreed or strongly disagreed with taxing earnings at all.
With negative gearing set to be centre stage in the election contest, respondents were locked at 41-41 on Labor’s policy of limiting the tax concession to apply solely to newly constructed homes.
Source: The Age
Anne Shaw* and her husband love going on cruises, finding ocean travel to be the perfect holiday. But there’s another benefit for the grandmother of four: “It’s a way of escaping without having to say no to requests to look after grandchildren,” she admits.
Shaw isn’t alone: as much as they adore their grandkids, many of today’s nannas and grandmas feel that looking after grandchildren encroaches on their lives or is physically exhausting. Yet most of these women aren’t telling their grown-up offspring how they really feel.
Looking after the grandchildren can be a fraught issue; a complex web spun from conflicting emotions including love, guilt, joy, fear and obligation.
And the reality of doing it regularly – that it’s hardly all bliss and contentment – is such a taboo subject that all the grandmothers interviewed for this article asked not to have their identities revealed.
Baby boomer grandmothers know their Gen X sons and daughters are under significant financial strain. Dual-income families, demanding jobs, expensive childcare and the high cost of living mean mums and dads are turning to their own parents to help out with their kids while they work.
Grandparents provide childcare for almost one-third of children of working parents, according to 2015 data from the Australian Bureau of Statistics.
“In Australia, grandparents are the largest source of informal childcare after parents … Many households could not function without the unpaid input of grandparents,” write Barbara Pocock, Natalie Skinner and Philippa Williams in their 2012 book, Time Bomb: Work, Rest and Play in Australia Today.
This is no secret. What’s less well known is how these grandparents feel about and respond to requests for care – especially grandmothers, who usually take the lead in the grandparenting arena (research shows that even when grandfathers and grandmothers provide care together, grandmothers are more likely to take on routine or repetitive tasks such as bathing and feeding).
Janet Gibson*, a grandmother of 10, is frank: “When my first grandchildren were born, it was a pleasure to look after them. It never felt stressful.” But that was more than 20 years ago. Now in her 70s and suffering from arthritis, caring for the grandchildren is very different.
“I love the children but I’m physically unable to do what I used to do,” Gibson says, referring to the fact that it’s painful for her to pick up her baby granddaughter. Despite the difficulty, Gibson and her husband regularly look after the baby so their daughter can work. They’ve never told their daughter the extent of Gibson’s health issues.
“Because I feel it would be unfair,” Gibson sighs, referring to the fact that she was very involved in caring for her older grandchildren and wants to treat her children equally.
This desire to help each of their children equally was mentioned by other grandmothers. Although understandable, it complicates the grandparenting experience, especially in large families, because more grandkids means more time and energy from grandparents who are only getting older.
Anne Shaw agrees – over the years her feelings towards grandparenting have changed. “I was so looking forward to becoming a grandparent,” she says. Before her first grandchild was born, Shaw reduced her paid employment from full-time to four days a week.
“I couldn’t give my kids money, so looking after my granddaughter was my way of helping out,” she says.
But 11 years and four grandchildren later, Shaw notices that she gets tired more easily and doesn’t have the patience that she used to. Still, she never says no to requests to look after her grandchildren because she “absolutely loves” seeing them. “I don’t admit it when I’m tired,” she says. “I just get on with it and do what needs to be done.” Now retired, this grandmother says she can simply catch up on sleep if she needs to after the kids leave.
But not all grandparents have this luxury: many juggle care of grandchildren with paid work, leaving them with little downtime.
The number of older women in the Australian workforce has significantly increased over the past few decades.
In the early 1980s, just 10 per cent of Australian women aged 60 to 64 were in paid employment, according to the Australian Institute of Family Studies. By 2009-2010, their presence had quadrupled to 41 per cent. (There has also been a small increase in the workforce participation of women aged 65 and over during that same period, from 3 to 7 per cent.)
Jill Westbrook*, in her mid-60s, is a working grandmother of two. For her, the issue of caring for grandchildren is more about how it restricts her income than the physical exhaustion. “I tend to say no to extra paid work because the grandchildren come first, but I’d like to say yes,” she says.
The combination of paid work and care also means Westbrook doesn’t get many free evenings. She wishes she had more time so she could play bridge, go to the theatre or the movies.
So why doesn’t she just say no when she is asked to look after her grandkids?
“Because I love my children and don’t want to see their lives any more difficult,” says Westbrook. “Too much financial pressure can strain a marriage, and if I can ease that I’m very happy. I’m divorced and want my children to be with their partners forever.”
Helen Andersen* is in her early 60s and regularly cares for three of her grandchildren. Of all the women I spoke to, Andersen is the only one who has initiated honest conversations with her children about her grandparenting role.
“I come home from a day looking after the kids and every bone in my body aches,” she says. “I don’t have the energy I used to, and I don’t know if the younger generation appreciates that fatigue.”
Since having that conversation, Andersen’s daughter treats her mother more gently and is more considerate. And Andersen is certain that’s a good thing. “When you’re honest, it’s such a relief,” she says. She believes it’s vital for grandmothers to let their kids know they’re not superwomen, instead of always insisting they’re fine and happy to look after grandchildren.
Andersen also acknowledges how difficult it is to refuse requests for grandchildcare: “You always push yourself because it’s your child,” she says. “The hardest thing to do is say no because we’re programmed to help and love and care and to give support over resting our aching bodies.”
Myra Hamilton, a research fellow with the social policy research centre at the University of NSW, says: “Because grandchildcare is tied up with love, family history, culture and shared experience, setting boundaries around care becomes difficult.”
Dr Briony Horsfall, a sociologist at Swinburne University, agrees there are great expectations on Australian women to be constant sources of care-giving. “These grandmothers are nurturing multiple, intergenerational relationships. It’s quite subversive to say no because there’s a risk of being seen as a ‘bad’ grandmother and a ‘bad’ mother [to adult children].”
Another complicating factor, particularly for paternal grandmothers, is the fear of decreased access to grandchildren if they decline care, especially if it’s a daughter-in-law making the request. Sometimes, it’s easier to play it safe and just lie – as does one grandmother who pretends she is feeling unwell, or says she’s going out.
Of course, it’s not all bad: caring for grandchildren can provide enormous joy and satisfaction. When I asked each grandmother what their ideal care scenario would be, not one elected to opt out of caring for their grandchildren. Rather, grandmother utopia involves fewer care hours; or to spend more time having fun with grandchildren, for example taking them to the park or the beach; or to have extra paid help to do the more physically demanding jobs, such as cleaning and other domestic duties.
A 2015 study, Grandparent Childcare and Labour Market Participation in Australia, commissioned by National Seniors Australia, found there is a tipping point after which providing care becomes less enjoyable: grandparents who provide 13 or more hours of care a week are less likely to enjoy caring for their grandchildren, and more likely to feel the effects on their work and retirement decisions.
But often it’s not so easy for grandparents to reduce their care hours, says Myra Hamilton, a co-author of the report. “The fewer options that adult children have in terms of work flexibility, childcare options and financial security, the harder it is for grandparents to say no to requests for grandchildcare.”
A survey commissioned by the Australian Seniors Insurance Agency found that 58 per cent of grandparents have had to sacrifice their own lifestyle and recreation, and 30 per cent have had to alter their work arrangements in order to care for grandchildren, while 23 per cent said they’d like to look after their grandchildren less often than they do.
Becoming a grandparent is supposed to be the gold medal for surviving the hardships of parenting; the ultimate love affair. But the truth is more nuanced.
“My friends secretly comment about the mind-numbing boredom of grandchildcare,” says Andersen.
“You are dealing with children with brains the sizes of peas. Lots of us held high-powered jobs, were successful businesswomen, so however much you love those sweet babies … how many games of Eye Spy can you play without wanting to rush back to your fabulous novel and a quiet cup of coffee?
“We feel wanted, satisfied with a job well done, loved and delighted in the love we get back,” she says. “But it comes with issues no one discusses and that men never even think about.” •
*Names have been changed.
- In 2013, the average age of becoming a grandparent was 58-60; in 1953, it was 54-56.
- In 2014, 837,000 Australian children were cared for by their grandparents in a typical week.
- In 2014, more than 97 per cent of grandchildcare was unpaid.
Sources: ABS, McCrindle Research
In the movie Intern, Ben Whittaker (Robert De Niro) takes on a job as a a senior intern at an online fashion site. Photo: Supplied
Breaking through the glass ceiling is relatively easy. I did it almost 20 years ago. But no one told me about the glass trapdoor – that was the shock nothing in my stellar career had prepared me for. At the age of 50 I left a job for family reasons for a short while, but I faced hurdles when I tried to return to the workforce. My corporate stiletto had slipped straight through the glass trapdoor. I simply hadn’t realised that in the modern workplace, 50 is considered old.
This is not a unique story. The tentacles of age discrimination reach into every facet of Australian society and nothing we are now doing is working. The government bribing companies to take on older workers by paying $10,000 an older employee has been a dismal failure. Fewer than 3000 people are involved in a scheme that hoped to attract 32,000.
The government’s intergenerational report makes it clear that older workers must work longer. It is a financial imperative, as it will boost productivity. An extra 3 per cent participation rate in workers over 55 is estimated to account for a $33 billion boost to Australia’s gross domestic product.
As an added incentive for older people to continue to work the pension age will go up. From July 2025, the qualifying age to receive the age pension will continue to increase from 67 years, by six months every two years, until it reaches 70 years in July 2035.
The fatal flaw in this grand strategy is that employers are reducing older workers from their workforce at alarming rates. Once older workers have left a job, it becomes difficult to re-enter the workforce. If they do, they are often underemployed and unable to maintain their previous standard of living.
To add to the problem the definition of an older worker is getting younger. It appears to be going down in five-yearly increments. Forget 65 think 50 or even 45. For redundancy purposes if an employee is 45, they are defined as an older worker. They receive small extra payments for the privilege. They then enter the world of unemployment where it takes an average of 72 weeks for them to re-enter the workforce in some capacity.
Workers are becoming so fearful of being classified as old they are spending big dollars on keeping themselves looking younger. Research shows that one of the primary reasons women go under the surgeon’s knife is to ensure employability in the workforce. As an executive coach and facilitator, working in corporate Australia, I am aware of the level of fear. That fear is not only confined to women it just starts earlier for them.
The government has acknowledged employment discrimination may derail its plans. An inquiry, to be released in July, has been established to identify what is required to keep older people in the workforce. Let’s hope it packs a punch because it will have to be taken seriously if the government wants to deliver on any number of economic outcomes.
I agree with Susan Ryan, the Age Discrimination Commissioner, that age discrimination is a social and economic issue affecting a growing cohort of men and women. It caught government by surprise.
It is important to dispel the myths: Australians over the age of 50 do want to work. The issue is they often cannot get a job after their employment has been terminated. The new jobs they are offered are often casual or jobs that no one else wants.
Financial hardship is becoming an inevitable reality for this group of older Australians and it’s affecting their health. Worryingly men, who have lost employment between 45 and 65, are one of the largest growing groups of people with mental health issues.
Staggeringly, there are more people over 50 on work-for-the-dole schemes than unemployed people below 22. Even more shocking there are now 210,000 Australians over the age of 50 who are living off unemployment benefits. Serious intervention is required if for no other reason than self-interest. No amount of bribery, no amount of Botox, no amount of surgery is going to mask this problem any time soon.
It’s easy for the the government to get the data, change pensions policies and set up an inquiry. It is much more difficult to change a culture. This is challenging in Australia, as ageism in the workforce is as rampant as it is silent. Silence can no longer be accepted.
It’s time for governments, employers and Australians to act. Unlike the suffragettes, or powerful images of Ruby Bridges, the first black child to attend an all-white school in America, there has been no similar campaign or strong movement for the greying masses for anything to change.
Given the boost to profits, productivity and reduction on the burden of the aged pension, it is hard to understand why corporate Australia, state and federal governments and the Productivity Commission are not rallying in the streets to make this happen.
Jenny Brice is an executive coach and a former HR director for several large Australian companies.