Handouts still funding the twilight years

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Government handouts still funding most retirees’ twilight years Australians are working longer and becoming less dependent on government handouts when they retire, but these benefits are still the major source of income for retirees, new data reveals.

Most men now retire in their early 60’s while women commonly stop working in their late 50’s, according to the latest Household, Income and Labour Dynamics in Australia (HILDA) Survey.

The average age at retirement of men who retired between 1996 and 2003 was 59.8. This figure rose to 62.6 years for men who gave up work between 2004 and 2011.

For women the average age at retirement jumped from 57.7 to 59.7 over the same period.

Report author Associate Professor Roger Wilkins said the data also showed fewer people are retiring while middle aged, despite heated political debate about raising the pension age.

“In an eight year period to 2011 the proportion of men who retired before 55 years of age dropped significantly by 11%."

The proportion of females in this catagory also dropped sharply by 12%,” he said.

The HILDA survey also shows that retirees are becoming slightly less dependent on government benefits, such as the Age Pension.

The proportion of retired people for whom government benefits are the main source of income declined from 65.8% to 63.5%, while government benefits as a mean share of household income of retirees also fell, on average from 64.3% in 2003 61.1% in 2011.

However government benefits still remain the dominant source of income for retired people, representing 61.1% of their total income in 2011.

Overall, the research revealed that Australians approaching retirement underestimate how reliant they will be on government benefits.

Associate Professor Wilkins believes this is a cause for concern to policy makers.

“A significant proportion of Australians are incorrectly forecasting their future retirement age and reliance on government benefits.“

“So even with some increases in workforce participation among older people, there are likely to be large increases in fiscal demands associated with the Age Pension over coming years as the Baby Boomer generation stops working.”

HILDA is Australia’s only large-scale nationally representative longitudinal household survey. It uses annual interviews with more than 17,000 Australians to create a detailed picture of how their lives are changing over time. It provides a ‘moving picture’ of emerging issues and trends in Australia.

Source: ‘Retirement expectations and outcomes’ (HILDA Report 2014, Part 5, Chapter 17)