Wednesday, December 30, 2009

Baby boomers get old?

The Beatles are set to replace Glenn Miller in retirement homes. Australia's first wave of baby boomers - those born from 1946 - become eligible for the pension from next week.

Official projections suggest up to 107,000 baby boomer women will reach the female pension age of 64 next year. A year later a further 100,000 baby boomer men will reach the male pension age of 65 as a further 120,000 women will reach pension age.

"The bulge will expand for 15 years," says David Knox, an actuary and worldwide partner at Mercer Consulting. "And these boomers will be living longer than did earlier pensioners."

Dr Knox was behind a push to gradually lift the pension age to 67, a decision implemented in the May Budget with the first increase to 65 years and six months due in 2017 and the final increase in 2023.

"I think we'll need more," he told The Herald... "I would like the pension age to keep increasing as life expectancy increases, not on a one-for-one basis, but by six months for every year that lives lengthen, so that the costs are shared."

The rapid aging of the Australian population brought on by the steady march of boomers into their upper sixties and early seventies will be a focus of both the Henry Review and the Treasury's third Intergenerational Report to be released early in the new year.

Current projections suggest that by the middle of the century almost one in four Australians will be aged 65 or older, roughly double the present 13 per cent.

The proportion aged 85 or older will triple from 1.7 per cent to 5 per cent.

In an early insight into the content of the report Treasurer Wayne Swan told the Australian Institute on Population Ageing Research in September it would find that Australia's population will be larger and somewhat younger than had been believed, driven by an unexpected jump in the birth rate and greater than expected immigration.

The challenge would be to encourage older Australians to continue to contribute to the community, as carers, volunteers and as ongoing workers.

The Budget eased the pension income test in order to make continued part-time work easier.

But David Knox said the reality was that most Australians retired well before the pension age, with retirement at 58 or 59 typical, although there were signs the age was increasing to 61.

"The global financial crisis has eaten into nest eggs forcing some people to postpone their retirement plans. And the recovery is going to encourage employers to hang on to their workers as they become scarce," he said.

The Henry Review has considered recommending slowly lifting the superannuation preservation age to 67, to bring it into line with the higher pension age from 2023, effectively making it impossible to get a retirement income before 67 without working or living off investments.

Australians live 23 years longer than they did when the aged pension was introduced in 1909.

Published in today's SMH  and Age 


Related Posts

. Ken Henry's grain of mustard seed - what to expect

. You want us to work 'til 67? And then when?

. Retirement at 65 is old hat! Let's raise the pension age... then raise it again

. Why Australia's 'aging timebomb' is fizzing

. The one graph that sums up today's intergenerational report