You drive to the station. On the way, you drop your daughter at school. Her first lesson today is English. Her teacher is 72 year old Mrs MacDuff. You park your car and buy your weekly ticket from Alan, who has been at this station for 5 years. Alan is 68. At the next station, your good friend Margo gets on. Margo works at your bank. She is 74. But she tells people she’s 69. Before going up to your office, you buy a coffee. You’re served by Ralph as usual. Ralph has just turned 80. You’re about to get in the lift when a young punk barges past, iPod blaring, and punches the Door Close button impatiently. “Kids today have no breeding,” you think. “Can’t be a day over 50 and he thinks he owns the world.”
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This could be a typical scene in a typical Australian city sometime in the future. And maybe not as far in the future as you imagine.
The Australian workforce is ageing - and doing it faster than the population as a whole. Faced with the massive cost of caring for an ageing population, the government will find ways to encourage organisations to hire more mature employees and will offer incentives to workers who choose to stay in the workforce until later in life.
Of course, for now at least, the government mightn’t have to do much at all to persuade people to postpone retirement. Lots of Australians in their late 50s or early 60s have already put off retirement plans as a result of GFC-fueled losses in their super savings.
It is time that legislation and attitudes changed so that we no longer view 65 as the age at which we leave the workforce.
From 1985 to 2005, the average age of full-time workers rose by up to 6 years, depending on business sector. The biggest jumps in age were recorded in education and health care. The sector with the oldest average age of employee is education. Surprisingly perhaps, some fairly strenuous jobs also have higher than average workers - mining and manufacturing, for example. So does agriculture, but farmers tend to stay on the job until they drop.
In 1900 New South Wales introduced the Aged Pension for men and woman over 65. Within a few years, it had been adopted throughout Australia.
The only problem with this plan was that few people lived long enough to become eligible for the pension. In 1910 the average life expectancy of an Australian was only 55.2 years for men and 55.8 years for women. So basically, if you defied the odds and lived a decade longer than you should have, the government would give you something to live on.
Today, the average life expectancy of Australian men is 77.6 years and 83.5 years for women. By 2030, a girl could expect to see 90 comfortably. In many countries the fastest growing age group is centenarians. The UK predicts 350,000 over 100 in the year 2058.
That’s a lot of telegrams from the Queen. So what does this mean as far as super is concerned?
First, our super savings are going to need to last 20 years or more if were going to be comfortably well off in retirement. There are plenty of calculators freely available to help you determine if your super savings will do that.
Second, we are going to need to think seriously about staying in the workforce beyond age 65. To do this requires some co-operation from employers. There are too many people made redundant simply because they no longer fit the youthful image that a business wants to project. Of course, age is never mentioned when they’re told they’re no longer required. Words frequently used include realignment, merger, downsizing and, these past couple of years, the GFC has been a popular excuse. Some businesses are bucking the trend and recognising the value of wisdom accumulated over decades. However, as many mature job-seekers know, too many jobs are being given to fresh graduates.
The main reason isn’t that the hatchlings are better - but they can often be hired for less money. However, on the principle that you get what you pay for, perhaps more employers will come to their senses and help mature workers to keep working.
Third, we are going to need to adjust our understanding of super. For too long it has been compared with shares and property. The problem is that super just isnt as interesting as shares or property. You cant trade it. There isn’t much point in watching its movements day to day. You can’t live in it. Or negatively gear it. Or renovate it. And whilst super delivers respectable returns, it pales beside shares or property in their boom years.
Where super outshines shares and property is as a vehicle for reducing tax. In spite of government meddling, super still whips most other investments when tax is taken into account. Its other advantage is long term performance. Sure, property values in Australia seem to just keep rising - but many property experts reckon that a massive adjustment must take place sooner or later. And shares, well, when the going is good, they’re spectacular, but when things go bad, they are horrid.
Yes, were getting older. In 12 months to June 2009, the number of Australians over 65 jumped 3%. There has been plenty written about grey power. The problem is that whilst older people have the numbers they generally haven’t exercised their increasing power. And they should. One reason is that they’re likely to get a sympathetic reception from within the government. After all, government administration has one of the oldest workforces in the country.