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.

 

  •   25 May 2022
  • 6
  •      
  •   
6 Comments
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

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.

 

Leave a Comment:

RELATED ARTICLES

The big questions facing retirees

Why spending more in early retirement can improve lifetime income

Retirement spending is not one-size-fits-all

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

How the typical Australian Family could save $844,350 in taxes

The value of a testamentary trust is not determined by wealth alone. Depending on circumstances, it can reduce the tax burden on inherited income, create efficiencies and help build intergenerational wealth.

Latest Updates

Fixed interest

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Economy

Are we in a recession?

What if the warning signs are already everywhere? From supermarket aisles to company failures, investors are being bombarded with recession signals. But most face a different risk that can be just as dangerous for portfolios. 

SMSF strategies

Meg on SMSFs - Division 296 actuarial certificates

The tax bill might be yours, but the event that caused it may not be. A key Division 296 calculation can sometimes attribute earnings in ways that many SMSF trustees won't instinctively expect or fully appreciate.

Property

The first impact of negative gearing reform is not the tax bill

Negative gearing changes formally begin in 2027, but the first consequences may already be here. A subtle shift is quietly influencing who can borrow, how much they can access and which property strategies still stack up.

Economy

The oil market is running out of easy answers

The biggest threat to markets may not be what investors are watching. The numbers have stopped adding up and supply is harder to measure, with forecasts becoming simple guesses. A more fragile reality is being masked.

Investment strategies

The state of investor knowledge in Australia

Australians are investing more than ever, yet a surprising divide is emerging between those building wealth effectively and those making costly mistakes. Surprisingly, the gap has little to do with income, age or starting capital.

Taxation

Complexity and capital gains

A case study shows that the ‘30% minimum CGT’ is a poorly conceived tax that adds significant complexity to an already over-complex system. A less complicated model would create a much fairer progressive tax scale.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 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.