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AMP.NATSEM Report:Poor health will prevent one in four Australians from saving enough money for retirement

Wed 10 June 2015

In 2035, one in four men and one in five women aged in their sixties will be in fair or poor health, reducing their ability to work and save for a quality retirement, according to the latest AMP.NATSEM Income and Wealth report.

Against a backdrop of increasing life expectancy and a proposal to increase the age pension to 70 years in 2035, the report: Going the distance – working longer, living healthier, looks at how Australians age through their sixties and whether they will be healthy enough to work longer.

Modelling in the AMP.NATSEM report found:

  • Working longer will be a challenge for one in four (25.6%) men and one in five (20.4%) women who are predicted to be in fair or poor health when aged 60-69 in 2035.
  • For Australians currently in their forties and in fair or poor health, it’s predicted the majority of men (65.1%) and women (72.1%) will be unemployed when in their sixties. 
  • Close to half (48%) of Australians currently aged 40-54, who are in very good health, are likely to see a decline to fair or poor health by 2035.
  • For those currently aged 65-69 and in good health, 33.1 per cent are likely to be working, compared to only 15.7 per cent if in fair or poor health.

AMP Chief Customer Officer Paul Sainsbury said the report showed health will be an important factor in the later years of working life and our ability to save for retirement.

“The good news is that Australians are living longer. But we know more years in retirement places more strain on our superannuation balances so it’s likely many of us will need to work longer.

“This raises some confronting questions, in particular, how healthy we will be in the later years of our working life and what our financial position will be.     

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

Professor Laurie Brown, of NATSEM, said: “The report shows that Australians in good health are more than twice as likely to be in the workforce compared to those in poor health.”

“Currently, the majority of Australians leave the workforce before the age of 65. With the possibility of this increasing to 70 over the next 20 years, younger Australians need to consider the importance of their long-term health and its impact on career, finance and retirement,” Professor Brown said

 

Overview of key findings:

Australians are living longer… 

Australia is ranked fourth for men and fifth for women for life expectancy compared to other countries in the OECD. Australian men currently aged 65 can expect to live to 84.8 and women to 87.4.

…But we’re still retiring young

For Australians who have retired in the last five years, the average age of retirement for men is 63.3 years and 59.6 years for women.

The majority of Australians have left the workforce by age 65

Currently, 83 per cent of men and 92 per cent of women older than 65 years are no longer working. This is a significant decline from people aged 60-64, where 40 per cent of men and 60 per cent of women are unemployed.  

The health of Australians as they age

More than one in five (23.6%) of men and one in four (24.9%) women who said they were in good health at age 65, were in fair or poor health by the time they reached 70 (data from 2008 to 2013).

Projecting our future health state

By 2035, on average only one in three (35%) Australian men and 28 per cent of women aged 40-54 are likely to have the same health status when they are in their sixties. For Australians currently aged 40-54 with very good health, it’s likely their health status will decline to fair or poor by 2035 for 49 per cent of men and 47 per cent of women.   

Health impacting ability to work

Currently, 72.2 per cent of men aged 60-64 years and 41.5 per cent of men aged 65-69 with very good or excellent health are likely to be in the workforce. If in poor health, this reduces to 34.8 per cent and 22.5 per cent, respectively.

The trend is higher for women, with 55.4 per cent aged 60-64 and 24.7 per cent aged 65-69 with very good or excellent health likely to be working. If in poor health, this reduces to 17.8 per cent and 8.9 per cent, respectively.  

Female participation in the workforce is increasing

When looking at gender, female labour force participation in the 60-64 year age group has increased significantly – tripling from 12.8 per cent to 45.1 per cent between 1979 and 2014.

International comparison

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

Jobs for older workers

The majority (53%) of workers aged 60-69 are professionals. Manufacturing, electricity and construction sectors employ one in four men aged 60-69. The education and health sectors dominate the employment of women with 49 per cent aged 60-69 working in these industries.

Education and employment

People with tertiary qualifications are more likely to be employed at older ages with 49 per cent of those aged 60-69 years with post school qualifications still employed compared to only 30 per cent whose highest education is year 12.

State by state

The Northern Territory, Western Australia and Australian Capital Territory have higher labour force participation rates, including for people in their sixties, than in the other states. This may reflect the specific nature of the labour markets in these regions such as the strength of the public sector in the ACT and the strong mining economy in recent years in Western Australia.

About AMP.NATSEM

Since 2002, AMP and NATSEM have produced a series of reports that open windows on Australian society, the way we live and work – and our financial and personal aspirations. 

AMP publishes these reports to help the community make informed financial and lifestyle decisions and to contribute to important social and economic policy debate.

Professor Laurie Brown (NATSEM) is available today for interview.

Download a full copy of the report here.

MEDIA ENQUIRIES

 
Mark Roberts Professor Laurie Brown
AMP NATSEM, Institute for Governance and Policy Analysis
Ph: 02 9257 1086 Ph: 02 6201 2770
Mob: 0466 328 581 Mob: 0407 008 361

 

 

 

 

 

 

 

This release was written and first published by AMP. Click here to view original post.

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