Is retirement good for you when you’re active and healthy?
Living longer, healthier lives than generations before us must be a welcome outcome for our ageing population, right? Having years of leisure time ahead, free of work commitments sounds like welcome relief when we’re in the thick of our busy lives. If we’re still healthy and productive, is full-time retirement from the workforce, good for us?
Living longer is great news
Yes. Increasing longevity is fantastic news for those of us that want to spend more time shared with loved ones, in good health. In an ideal world, living longer means more time to indulge our passions and tick off our bucket lists once we retire from formal work commitments.
Here are three considerations to ponder about retiring from work
The first is that research has repeatedly indicated that people in some form of employment, including voluntary work, report higher levels of well being in comparison to peers that aren’t. According to IZA World of Labour, late life workers report higher levels of well being than retirees. Voluntary part-time workers reported higher levels of life satisfaction and less stress than full time employees.
The second is that our paid workers and taxation system will need to contribute a lot more money to support a higher number of age pension payments, for a longer period of time than ever before. This doesn’t sound like great news for the health of the economy. According to Price Waterhouse Coopers’ (PwC) Golden Age Index , encouraging and supporting older people to stay in the workforce for longer could increase GDP across OECD countries by as much as $2.6 trillion!
The third is that we will all need to be able to financially support ourselves through two, three or more decades beyond the current pension age. Extra income for longer could certainly help.
Our aspiration should be to enjoy living longer, healthier and more active lives. Looking after the quality of our lifestyle, and that of our senior peers, may be best achieved by rethinking the retirement age. A gradual transition from the workforce over a number of years may give us a better quality lifestyle through our senior years.
How are other countries supporting older workers?
According to the Organisation for Economic Co-operation and Development (OECD) and the PwC Golden Age Index, the top ranking OECD countries for supporting seniors in the workforce, share the following approaches in policy making:
- Encouraging later retirement: such as lifting the qualifying pension age in line with longevity statistics, and offering financial incentives to work longer.
- Improving employability: such as offering educational and training incentives for older workers; and tax incentives for employers.
- Reducing employment barriers: such as combating age discrimination in the workplace.
Let’s explore how these leading countries are encouraging their seniors to work for longer.
How are Nordic countries encouraging later retirement?
In Australia, we know that the current qualifying pension age of 65 years and six months, will rise to 67 years by 2023. It is likely to continue to increase in line with the OECD’s recommendation that retirement age is directly linked to longevity statistics. Conversations are already underway around raising the qualifying age pension age to 70 by 2035.
In direct response to being home to the fastest growing ageing populations, Nordic countries (and New Zealand!) are leading the way in providing opportunities for people over 55 to stay in the workforce, longer.
As an example, Finland offers financial incentives to Finnish seniors, the longer they stay employed.
The Finnish Tax Reform 2005 introduced a compulsory occupational pension scheme, and gave seniors flexibility to retire in an age bracket between 63 and 68. The Reform offers strong financial incentives to retire even beyond 68. And, if a Finnish senior wants to retire earlier at 62, they have that option but their pension income is reduced for every month earlier that they retire.
Iceland, number one in the top OECD performing countries supporting older workers, offers a similar approach to pension incentives for older workers, along with tax benefits.
Third leader on the OECD list, Sweden abolished payroll taxes for older workers in 2008. This is attractive to organisations, and has been reported to have driven demand for older employees.
In its Golden Age Index, PwC recommends introducing flexible work policies such as a phased retirement option or training programs to support older workers. Putting in policies to support part-time hours and equipping older workers to be able to work away from the office are just a couple of examples of flexible working options that may encourage older workers to stay employed while they gradually transition to retirement.
Putting economics aside, if you’re in good health, being employed and offered flexible work options is simply good for your wellbeing.
At RCA Villages we welcome older workers
Our sales team and staff at RCA Villages are increasingly seeing residents moving in to the villages while they are still working. Some of the team who have worked in the Australian retirement village industry for decades share that the changing demographic of full-time, part-time and voluntary workers in the villages bring a vibrancy to the community that didn’t exist a couple of decades ago.
Read our article ‘Welcoming Older Workers’ to learn more.
IZA World of Labor > Articles > Late Life Work and Well Being
OECD > Ageing and Employment
Gallup > Opinion > Flexible Retirement May Help Labour Markets