Raise the pension age to 70
IF YOU'RE looking forward to retiring in your 60s or maybe even in your late 50s, you might need to re-assess.
Research from Grattan Institute says the economy can be only be sufficiently stimulated in the long term if Australian employers hire more workers in their mid to late 40s, and encourage more women to join the workforce.
And the kicker - the Melbourne-based public policy advisers believe the Federal Government should lift the retirement age to 70 to ensure a resilient Australian workforce.
According to the research, doing so could contribute more than $70 billion per year to economic growth in the next decade.
The report, prepared by Grattan Institute CEO John Daley, said Australia would be much better positioned if we made better use of our older workers.
"Fifteen per cent more of the 55-64 year-old cohort work in New Zealand than in Australia, despite the close similarities in culture and social policy," Mr Daley writes.
"This may be partly explained by New Zealand's substantially less generous approach to pensions and lack of a strong superannuation policy.
"There are also comparatively low rates of participation for Australians not yet at pension age.
"Australia is not making the most of the skills and experience of its older workers."
Given that, Daley suggests raising the pension and preservation age - the age at which workers can access superannuation - would compel more workers to remain in the workforce for longer. "It might be argued that since many Australians retire before they're eligible for the pension, changes to the pension age will not substantially affect retirement decisions," he writes.
"However under the current regime, people can retire at any age after 55 and live on their superannuation and savings until they qualify for the Age Pension at 65. A later pension age would effectively encourage many to work for longer, even if they formally retire before the pension age."
The research suggests that recent incentives, such as the Job Bonus for hiring older workers, will have only a limited impact on older age participation.
As always, there's a trade-off. For those of us decades away from retirement, the idea of waiting even longer isn't exactly appealing.
However without increased participation by older workers, taxes will need to increase to fund the pension and health costs of an increasingly long-lived population.