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Retirement age set to rise to 70: how will it impact you?
According to a recent white paper by the World Economic Forum, the retirement age is set to rise to 70 by 2050 in most countries around the world – in line with an expected increase in the number of people over 65 from 600 million today to 2.1 billion.
And in Australia, it’s predicted that we’ll reach that stage much sooner, with the Australian Government planning to set the eligibility for the Age Pension from 65 to 70 by 2035. So how will these changes affect employees and businesses? Let’s take a look at some of the key considerations.
How an increase in the retirement age will affect workers
To support a liveable income in retirement, it’s recommended that individuals save 10-15% of their average annual salary. However, in Australia, the average person’s savings sit at 4.7%, meaning most employees aren’t adequately prepared for retirement.
With eligibility for the Age Pension stretching even further out, individuals will need to budget accordingly to live entirely off their own funds if they want to retire before 70.
There will also be an increased need for mature-age workers to stay current in their industries and upskill wherever possible to ensure they stay relevant in their fields if they wish to continue working.
Consequently, the market could become more competitive for mid-level workers looking to move up and entry-level workers entering the field as older employees vie for skilled positions. Similarly, workers with physically demanding jobs will need to start planning early to make a career pivot and take on a less taxing role in their field, should their current position become too strenuous.
How the retirement age increase will impact businesses
With older employees becoming the norm across all industries, businesses will need to look at ways they can accommodate mature-age employees. This could involve creating opportunities for training and upskilling, as well as allowing more flexibility for employees in scaling back physical aspects of their jobs (by taking on more administrative work, for example).
With the new potential for businesses’ most skilled and valued employees being over the age of 65, it will also be vital for companies to take a proactive approach to keeping their older workers healthy and happy through initiatives like wellness programs.
Conversely, with older, more experienced employees staying in their roles longer, there will be less room for incoming talent – so it will be important for organisations to create solid succession plans to assure younger staff that there is a clear path to progression, even if the wait is longer.
Companies with occupational pension schemes will also need to review their policies to ensure they remain current, and any changes made will need to be communicated clearly to all employees. Organisations should also prepare for increased costs of employee benefits such as life insurance and company car insurance.
Have more questions about the retirement age and how it will impact your business? Talk to a Michael Page recruitment specialist today.
With the retirement age predicted to increase to 70 in Australia by 2035, there are some key changes businesses and professionals should consider:
- Employees should start saving more and sooner for retirement as they won’t be eligible for the Age Pension until later
- Older workers should look for opportunities to upskill and remain relevant in their industries
- Businesses will have a vested interest in keeping their valued older employees happy and healthy through initiatives like wellness programs
- Organisations will need to create succession plans to motivate younger employees in a more competitive market