Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 459

When will I retire? Economic impact of an ageing population

Meeting the changing needs of older people in terms of housing, support services and work arrangements is a significant challenge facing Australia.

Demographers, economists and policy makers are increasingly concerned about the ageing population and the increasing number of people aged over 45 who will start to transition into retirement over the next 20 years. In 2021, 39% of the labour force was aged over 45-years-old, compared to 32% in 2001. Over the next 20 years, an increasing number of people will start to transition into retirement.

Age of retirement

In 2021, men aged 45-years-old were expected to retire at age 65.2 and women were expected to retire almost one year earlier at 64.3. Over the past 30 years the expected retirement age for women has increased by 3.5 years and 1.9 years for men.

Intergenerational reports prepared for the Commonwealth and State Governments highlight the challenges of an ageing population, including significant impacts on the labour force, consumption patterns, public finances and – in turn – economic growth.

Comparing the major Australian cities (based on the greater capital city statistical area), people in the larger cities of Sydney and Melbourne tend retire earlier than their counterparts in Brisbane Perth and Adelaide. This may be driven by the relative cost of living in Sydney and Melbourne, which encourages older people to shift out of the city as they age to a lower-cost regional area.

Important factors increasing the expected age of retirement:

  • A shift towards service-based jobs and away from more physically-demanding jobs.
  • Overall increased labour force participation among women due range of policy measures that have helped women strengthen their links to the labour force during their 20s, 30s and early 40s.
  • Increased demand for paid paternity leave (for both men and women), access to affordable childcare and early childhood education, and greater focus on gender equity within the society and in public policy.
  • Strong labour market conditions helping to retain older workers in jobs.
  • Changing social attitudes towards older workers.
  • Increasing trend towards part-time work amongst older workers.

Length of retirement

By combining life expectancy data with the expected age of retirement, an expected ‘length of retirement’ can be estimated. The length of retirement has implications for individuals as they manage their personal finances, the aged care sector, and for the government in terms of transfer payments and healthcare costs.

Men have seen a significant increase in expected length of retirement – from 9.3 years in 1978 to 17.3 years in 2019. This has been driven by increases in life expectancy, while age of retirement has remained relatively steady between 63 and 65 years old. Women have seen a 3.5-year increase over the same period.

Expected Age of Retirement & Length of Retirement, selected years

Source: Australian Bureau of Statistics – Life tables, and KPMG Australia

Key considerations highlighted in new report

Based on analysis of an age of retirement dataset prepared by KPMG Australia, the 'When will I retire' paper considers:

  • Implications of the length of retirement for both individuals’ personal finances and for government spending.
  • How an increasing age of retirement indicates that businesses will be able to access skilled labour for longer, although the data suggests that older workers would prefer to work part time.
  • The opportunity for both workers and businesses to come together to retain skilled workers and provide older people with income, social interaction and intellectual stimulation.
  • The move by older people away from the major cities into regional areas and the challenges and opportunities this presents.
  • The need to continue to maintain momentum on gender equity and what actions can be taken to address this.

 

Download report

Our latest thought leadership paper When will I retire? explores the implications and opportunities of the changing retirement landscape.

 

 

 

 

Terry Rawnsley is a Director, Demographics & Urban Economics, Planning & Infrastructure Economics, and Asaf Cohen is a Senior Consultant, Planning & Infrastructure Economics at KPMG. This article is general information only and does not consider the circumstances of any person. See report for full disclosure.

 

6 Comments
Clark
May 25, 2022

I would endorse the comment that "I don't know how I ever found the time to go to work" I am luckier than most; I enjoyed my working life and was able to retire gradually between the ages of about 69 and 72. Retirement activities include a lot of volunteering - Rotary club, Board of a local not-for-profit aged care facility, membership of Aust. and international working groups, keen interest in recycling and reaching carbon-negative status, etc.
Also keeping fit, helping kids and grandkids establish themselves, managing SMSF, gardening, reading etc.
We (my wife and I) have recognised that at 78 we are not as strong or active as we used to be, and have abandoned caravanning in favour of less strenuous accommodation when travelling. I have also reluctantly abandoned climbing trees with the chainsaw running. We both think international travel is generally becoming too difficult to bother with. However I still think a week or so in countries like Cambodia or Timor Leste evaluating a project and finding out what the locals really need , and how the local system works (usually thoroughly corrupt), is much more fun than a trip or cruise organised to the nth degree by some profit-making group. It may be a bit uncomfortable - lots of dusty travel on dreadful roads and tracks - but it is not expensive when the locals book your accommodation. Try $15 a night in Cambodia for accom with basic ensuite, noisy but effective aircon, and beer downstairs at $1 a can!
I am sure I will die with unfinished projects but I hope not soon.

Steve Halloway
May 28, 2022

I am 73 and have been visiting and volunteering in Cambodia for 14 years,going back soon.

Alex
May 25, 2022

Some day, I'd like to hear more about what people actually do in retirement. What replaces 10 hours a day of work?

Kevin
May 25, 2022

One word Alex,freedom.Life is no longer ruled by a clock or what day it is.
Summer the sun wakes you up.Winter you get to lie in until 7 - 7.30 am when the sun comes up.
The fun and exercise of cycling is great.An easy 5 - 7 hours a day doing that,the outdoor gyms that are built,sit ups,butterfly press,rowing machines and cross trainers .All the people that you meet being out all day,young and old.
When people said I don't know how I found the time to go to work and you thought they were slightly mad,it is true.There aren't enough hours in the day.to enjoy freedom .
The only regret I have is that I didn't retire earlier.
Then there is planning holidays,organising flights etc,loads of things to do.

Rob
May 25, 2022

Lots to do - I've been retired since age 53 (now 59). Read books, take long walks, manage SMSF & own/families' personal investment portfolios/admin, joined a local history group, volunteering, day trips, etc. Or even just doing nothing is sometimes good.

Mark
May 25, 2022

You can play 3 rounds of golf,or more,swimming,walking,dine out,rowing on local lakes,travel for $2 any where on govt transport after 60,travel overseas,cruising,meeting friends,cycling,donate time for charity work,etc
Many things to do Alex
Especially after working from the age of 15 it is my free time now to enjoy

 

Leave a Comment:

RELATED ARTICLES

The big questions facing retirees

Are lifetime income streams the answer or just the easy way out?

Three underrated investment risks in retirement

banner

Most viewed in recent weeks

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Latest Updates

Planning

Will young Australians be better off than their parents?

For much of Australia’s history, each new generation has been better off than the last: better jobs and incomes as well as improved living standards. A new report assesses whether this time may be different.

Superannuation

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Investment strategies

A steady road to getting rich

The latest lists of Australia’s wealthiest individuals show that while overall wealth has continued to rise, gains by individuals haven't been uniform. Many might have been better off adopting a simpler investment strategy.

Economy

Would a corporate tax cut boost productivity in Australia?

As inflation eases, the Albanese government is switching its focus to lifting Australia’s sluggish productivity. Can corporate tax cuts reboot growth - or are we chasing a theory that doesn’t quite work here?

Are V-shaped market recoveries becoming more frequent?

April’s sharp rebound may feel familiar, but are V-shaped recoveries really more common in the post-COVID world? A look at market history suggests otherwise and hints that a common bias might be skewing perceptions.

Investment strategies

Asset allocation in a world of riskier developed markets

Old distinctions between developed and emerging market bonds no longer hold true. At a time where true diversification matters more than ever, this has big ramifications for the way that portfolios should be constructed.

Investment strategies

Top 5 investment reads

As the July school holiday break nears, here are some investment classics to put onto your reading list. The books offer lessons in investment strategy, financial disasters, and mergers and acquisitions.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.