Aussies Not Saving Enough for Retirement
6 July 2015 at 11:22 am
One in five Australian workers expect to continue working into their 70s, according to the findings of new research from recruitment specialists Randstad.
The Randstad Workmonitor report also found almost half of Australians expect children born today will live to over 100 years of age.
Randstad’s Employment Market Analyst, Steve Shepherd, said he believes future generations will both work longer and spend more time in retirement – although they are yet to realise the financial impact this will have.
“Every generation tends to grow older than the last, so celebrating your 100th birthday is no longer science fiction, as the number of centenarians worldwide rises every day. This ageing trend has a major impact on society: the time we spend studying, working and retiring, our healthcare system, pension costs and so on,” Shepherd said.
“Although Australia’s ageing workforce has been a point of discussion for quite some time, many workers still do not fully understand the impact of longer life expectancies.”
Shepherd said with the pension age in Australia currently 65 and expected to hit 70 by 2035, it should come as no surprise that 63 per cent of Australian workers believe they will retire in their mid-to-late 60s. However, with life expectancies increasing, 80 per cent of workers recognise they are likely to work longer than the current retirement age in Australia.
“Although many people want to believe they will retire around the set retirement age in Australia, in this age of economic uncertainty and with life expectancies increasing, Aussies are working longer to ensure they are financially dependent in their retirement,” he said
Shepherd said a longer period of retirement also affects the nest egg necessary to support it.
He said some estimates said Australians need to save up to 40 per cent of their current income to be able to afford a comfortable retirement, but 69 per cent of Australians are only willing to save a maximum of 10 per cent of their income.
“It’s important Australians start saving as soon as possible for retirement, especially older generations. If we do not properly plan for our retirement now, we will be relying on the substantially smaller pool of younger generations to prop us up through support services like the aged pension which will have dire economic implications,” he said.
Shepherd said with an ageing population and more people expected to work well into their 50s and 60s, it is surprising only 44 per cent of employers have active policies in place to attract people over 55. He said experts suggest having older workers staying in the company longer would be beneficial to businesses.
“Businesses need to recognise mature workers still have a lot to offer and have a wealth of experience. With life expectancy increasing, keeping people in the workforce longer will be a critical issue for business in meeting their needs. There is no reason for businesses to discount mature jobseekers and instead should be looking to them to add value to the business, especially as Australia now has less school leavers entering the workforce,” he said.
“Workplace flexibility will be key to attracting and retaining this talent, as well as meeting business demand. Businesses need stronger recruitment and retention strategies that help build a mature, flexible and skilled workforce. Part of this will involve offering tailored working options to ensure they retain top talent for many years after the average workforce tenure. This will allow businesses to take advantage of the experience mature workers have under their belts.”
However, it appears many Aussie workers disagree, with 75 per cent expecting those over 55 to work comparable hours. Additionally, almost one third (29 per cent) of Aussie workers believe over 55s are less productive and take more sick leave.
“These are common misperceptions, however it is unfair to tar over 55s with this negative brush. In reality, productivity levels are comparable throughout the generations, and absenteeism is actually often lower in the 55+ age group than among younger employees,” Shepherd said.
Shepherd said Australians need to stop being ageist and instead take advantage of the knowledge and expertise older generations bring to the workforce.