Working beyond retirement age

In 2022, 130,000 Australians retired. The average age at retirement was 64.8 years^[1].

People retire for a variety of reasons including:

• Reaching age pension age,
• Being able to access their super,
• Declining health,
• Retrenchment or job loss,
• The need to care for others, including grandchildren, and ageing parents and relatives.

However, over recent years we have seen many instances of Australians either continuing to work on a part-time or full-time basis beyond normal retirement age or re-entering the workforce at some point after previously retiring.

Working beyond normal retirement age can offer several benefits for individuals and society. Here are some reasons why people might choose to continue working beyond the typical retirement age:

• Financial Security: Many older workers continue working to maintain financial stability. Pensions and retirement savings might not be sufficient, especially if they want to maintain their lifestyle or have unexpected expenses. The current cost of living pressures has added to this financial uncertainty.
• Health Benefits: Staying active through work can contribute to better physical and mental health. It provides a sense of purpose, social interaction, and keeps the mind engaged.
• Life Experience and Expertise: Older employees bring valuable life experience and expertise to the workplace. They can mentor younger colleagues, share insights, and contribute to organisational success.
• Flexible Work Arrangements: Some retirees prefer part-time or flexible work schedules. Continuing to work allows them to strike a balance between leisure and productivity.
• Social Connections: Work provides social connections and a sense of belonging. Colleagues become friends, and the workplace becomes a community.
• Purpose and Fulfilment: Having a job gives people a sense of purpose and fulfilment. It keeps them motivated and engaged.
• Skills and Knowledge: Older workers often have specialized skills and institutional knowledge that organisations value. Their expertise can be critical for business continuity.
• Reducing Dependency on Age Pension Systems: As populations age, the social security system faces challenges. Encouraging older workers to stay employed helps lessen the burden on these systems.

The Australian age pension system includes a financial incentive for people to continue to participate in employment in retirement. The ‘work bonus’ enables a person to receive up to $300 per fortnight in employment income without affecting the rate of age pension they receive. Where both members of a couple are eligible for the maximum work bonus and are also eligible to receive the full rate of age pension, they could be receiving a combined income of almost $60,000 per annum.

Remember, the decision to work beyond retirement age is personal, and individual circumstances vary. Some people choose to retire early, while others find fulfilment in continuing to work. Ultimately, it’s about finding the right balance that suits one’s lifestyle and goals.

[1] Retirement and Retirement Intentions, Australia | Australian Bureau of Statistics (abs.gov.au)