Worried you might not have enough put aside for a comfortable retirement? Relax – you may never retire at all.
As a new report finds that 78 per cent of Australians won’t have enough superannuation to last throughout their years of post-work leisure, researchers are seeing signs that the concept of retirement itself has a limited lifespan.
John Evans, deputy director of the Centre for Pensions and Superannuation at the University of New South Wales, said a trend was emerging of people not wanting to retire, while productivity pressures would require older workers to remain in work longer as well.
“The idea that you get to age X and go off to paint the gnomes or whatever just isn’t going to fly,” Mr Evans said. “I think the whole concept of retirement is going to change – I think it’s going to disappear.”
By 2030, all baby boomers will have left work and comprise 57 per cent of Australia’s retirees, while Generation Xers will make up 43 per cent of those supposedly taking it easy, according to the Deloitte “Dynamics of the Australian Superannuation System” report, released this week.
But in place of traditional retirement, Australia might evolve a system of older workers dropping in and out of work and accessing super through more flexible arrangements as needed, Mr Evans said.
The federal government’s surprise move this week, requiring employers to pay super contributions for employees over 70, recognises that workers are staying on longer.
Deloitte warned that 78 per cent of people in work now will exhaust their super during retirement and end up on the age pension.
A single male needs $540,000 in super to retire to a comfortable lifestyle at age 65, while a single female needs $595,000 due to her longer life expectancy.
Deloitte found the average male retiring in 2030 will have $217,000 in superannuation, while women will have an average $139,000 due to the effects of career interruptions and part-time work.
Even with the federal government’s intention to increase compulsory employer superannuation contributions to 12 per cent by 2019, up from the current nine per cent, Deloitte partner Wayne Walker cautions that workers who retire after a lifetime of higher contributions won’t receive an overly generous retirement benefit.
That creates the potential for more and more retirees relying on pensions funded by a dwindling number of working – and resentful – taxpayers.
Mr Evans believes there are big challenges in the form of higher public health and aged care costs but gradual changes will avoid a build-up of social tensions.
“I think it’s a doom and gloom scenario – I think societies will adapt,” he said.
