Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 525

The when and why of four million Australian retirees

Older Australians might be feeling their creaky knees, stiff backs and failing eyesight, but one thing they should not feel is neglected by government departments and agencies studying their potential financial futures. The many reports and reviews issued recently are giving greater understanding about retirement and attempting to improve the outcomes for Australians living on their savings.

Over the next five years, according to the Australian Bureau of Statistics (ABS), 670,000 Australian intend to retire, taking the total number retired to almost five million. A check of how often the word ‘retirement’ is searched for on Google over the last 10 years shows a recent and sustained spike.

Australia is not alone in focussing on its ageing population. The World Health Organisation reports that by 2030, 1 in 6 people in the world will be aged 60 and over, a formidable 1.4 billion people or an increase of 400 million in 10 years. The number will exceed 2 billion by 2050, including 425 million aged 80 and over. We will live in a world where 100th birthdays are common.

The strong focus on retirement

For most of the time since the introduction of compulsory superannuation for more workers in 1992, and increasingly as retirement has become a major social and political issue, the focus has been on accumulation. The demographic shift underway has forced a rethink towards the retirement phase and decumulation.

In addition to the recent Intergenerational Report and Legislating the Objective of Superannuation, regulators ASIC and APRA completed a joint review of the implementation of the Retirement Income Covenant, issued in 2020. Registerable Superannuation Entities (RSE) need to develop strategies to assist their members to know how much they can spend in retirement, confirming that many people die with the bulk of the wealth they held at retirement intact. The regulators were highly critical:

“Overall, there was a lack of progress and insufficient urgency from RSE licensees in embracing the retirement income covenant to improve members’ retirement outcomes.”

So with this bombardment of insights and guidelines on how governments and the financial sector are supposed to meet the needs of retirees, we should know who they are and why they retired.

For this we turn to the ABS which has issued a new report on Retirement and Retirement Intentions, based on FY21 data.

When are Australians retiring?

The ABS estimates there are already 4.1 million retirees in Australia. In 2020, 140,000 people retired, with an average age of 64.3 years. The age pension remains the primary source of income for most retirees.

Graph 1 shows the age when people retired from the labour force (that is, ceased working or looking for work).

The chart shows the current age versus age at retirement of retirees. For example, there are far more retirees over the age of 70 than people retiring at that age. People are still alive but they retired earlier. But in the age group 60 to 64, there are far more people retiring at that age. The average age at retirement is 65.4 for men and 63.7 for women.

Why are Australians retiring?

Retirement is a major change, giving up or losing regular income from work and relying on savings or a pension, but about 2,700 Australians a week take this step. The top three reasons for ceasing work are:

  • Reached retirement age or eligible for superannuation (28%)
  • Own sickness, injury or disability (13%)
  • Retrenched, dismissed or no work available (7%).

Women were more likely to retire to care for a person than men (4% versus 2%).

Not surprisingly, the age of retirement of people retrenched, dismissed or injured is much lower than people who voluntarily retire. It shows thousands of people in their 50s ‘retire’ each year against their own choice. One-third of retired women rely on their partner’s income after retirement, compared with only 7% of men.

Investment risk by generation

Turning to another recent report, the Australian Securities Exchange (ASX) releases an annual Australian Investor Study. The 2023 Report says that 10.2 million people or 51% of the adult population hold investments outside their home and superannuation. Over the years, the ASX has increasingly focussed on generational differences, especially as more younger investors start their journey with listed securities.

As should be expected, the 2023 Report shows retirees are highest for seeking ‘stable, reliable returns’ and lowest for ‘higher variability with potential for higher returns’. Retirees are also more likely than younger generations to hold a diversified portfolio.

SMSF members by age

A final check on SMSF usage by age from the latest ATO statistics (data for March 2023 is extrapolated from FY21). There were 606,000 SMSFs with 1,136,000 members, holding $890 billion.

Although there is much media coverage about younger generations opening SMSFs, only 3.1% of members are 34 years and under, although a strong 19.2% are aged 35 to 49. Which leaves 77.7% aged 50 and over, with high representation in all older age groups including 17.2% over the age of 75 and 11.9% between 70 and 74. It’s clear that SMSFs are a popular superannuation vehicle for older Australians.

The policy implications of these changes are profound, from the impact on government revenues, the demand for housing, the impending wealth transfer from baby boomers to their children, and the design of financial products for decumulation. Investors should factor demographic changes into assessing the future of any company.  

 

Graham Hand is Editor-At-Large for Firstlinks. This article is general information.

 

12 Comments
Brett
September 12, 2023

Where does ‘transitioning to retirement’ fit into the statistics? Eg cease full time work, (many employers are now very flexible allowing 2-3 days a week for ‘grey hair’ experience), or sit on some Boards, sell the family home, move to a lifestyle area. This is much more attractive than stepping off the cliff into 100% ‘retirement’ which has its risks.

Disgruntled
September 12, 2023

It's not really worth it now in mine and many others opinions regarding TTR's, proof is in the declining numbers of people taking up the TTR option.

For most now, TTR and Preservation Age are the same. Easier to either get a 2nd job for a bit, quit that and claim all your Super as a Super Pension tax free and then continue working. Or genuinely stop work and get a Super Pension Tax free and start a new part time job to keep busy a couple days of the week or have a bit of extra income.

New SG payments from your employer will be preserved again until you cease work again, but the first lot is yours to keep as you met a condition of release at the time.

Andrew Smith
September 08, 2023

Important analysis and this 'A check of how often the word ‘retirement’ is searched for on Google over the last 10 years shows a recent and sustained spike.'

No coincidence, but the start in searches a decade ago coincides with the top end of the baby boomer bubble starting to its transition to retirement.

An historical mother lode of demographic change in our permanent population, but our media and politicians keep focused on the 'other' i.e. blaming 'immigrants' for 'population growth', hence, supposed decline in quality of life.

The OECD future trends are quite stark, and Australia is no different to elsewhere, (ever) increasing old age dependency ratios:

https://data.oecd.org/chart/7b3u

OECD (2023), Old-age dependency ratio (indicator). doi: 10.1787/e0255c98-en (Accessed on 07 September 2023)

Aaron Minney
September 08, 2023

Some good thoughts here Graham.
One thing to watch out for with this survey is that it only asks people that are still alive. This skews the average age of retirement lower in Graph 1 and Figure 6. While the average age of retirement has increased, it isn't as dramatically as it appears.
A couple of points:
The average age of retirement in 2004 is listed as 55.1 in Graph 3 on the ABS website (based on people alive today). If you look back to a 2005 survey, the average age of retirement in 2004 was 61.6. This increase to 64.3 in 2020 is less than 3 years, not more than 9.
The data includes (with a warning that it isn't statistically significant) an estimate that approximately 600 women retired in 1947 at an average age of 23 years who were aged 96 in 2020 (on average)

Disgruntled
September 08, 2023

I'm 55 and looking to retire now. I am not of preservation age but according to the ATO website and conversations with the ATO I do not need to be. Using the Special Conditions of Release Clause on accessing ones Superannuation.

I have submitted an application for a ruling on my specific circumstance and have to wait up to 28 days for a response.

I'm sick of working and have more than enough to live off of earnings from the fund without touching the capital.

I could work longer, keep my Super invested longer and have even more money in 5 or more years but I lose something money can't buy, time. We are a long time dead. I don't see the point in dying with a big bag of money.

Curious bystander
September 08, 2023

I wish you all the best under the special conditions of release - a complex area particularly under preservation age. Assuming it is not a terminal benefit, just be comfortable with the tax on the taxable component.

Manoj Abichandani
September 08, 2023

Disgruntled

Preservation rules are very strict - try under permanent disability.

I know someone who successfully proved himself to be "Mad" and not capable of working. He could convince two doctors that he had "Problems with life" and could not work again - the problem was permanent (Not suggesting you use this avenue).

Good Luck!
PS: I feel sorry for you as I was in your shoes about 5 years back - I am 60 now. I enjoyed the last 5 years working - what the heck! - My wife is your age - I dare suggest to her to take that route.......grinning...

Possum
September 12, 2023

This highlights the need to save some of your funds outside of super. If you want to retire early, you can use the non-super capital to live on until you reach the age where you can access your super. You may be paying more tax on your investment income outside of super while you are working, but in exchange you have a lot of flexibility in when and why you can access your money.

Disgruntled
September 12, 2023

I don't wish appear rude here, however this response is the same for any similar type scenario posted.

The reality is circumstance can change for a person that alters their financial position, Divorce or Death of a Spouse being two notable ones.

Kim
September 07, 2023

I was forced to retire by a major Bank at just over 55 years of age. The method they used was to give me unachievable objectives (in my view) and then pressure and threaten me when I didn't achieve even one of the 20+ KPI's.

Geoff
September 12, 2023

Your employer can't force you to retire. They can retrench / fire you.

What happens after that is up to you.

Warren Bird
September 07, 2023

Thanks Graham.
Some of this data provides interesting benchmarks for super funds seeking to understand their own membership in the context of delivering on the Retirement Income Covenant. It's on us funds to help members make the jolting transition that is retirement, in particular by making the financial adjustment as smooth and effective as possible.

 

Leave a Comment:

RELATED ARTICLES

Who needs the Caymans? 10 ways to avoid paying tax

Are more taxes on super on the cards?

SAPTO and LITO, or do you really need an SMSF?

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

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.

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.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

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.

Latest Updates

Investment strategies

Trump's US dollar assault is fuelling CBA's rise

Australian-based investors have been perplexed by the steep rise in CBA's share price But it's becoming clear that US funds are buying into our largest bank as a hedge against potential QE and further falls in the US dollar.

Investment strategies

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Property

Soaring house prices may be locking people into marriages

Soaring house prices are deepening Australia's cost of living crisis - and possibly distorting marriage decisions. New research links unexpected price changes to whether couples separate or silently struggle together.

Investment strategies

Google is facing 'the innovator's dilemma'

Artificial intelligence is forcing Google to rethink search - and its future. As usage shifts and rivals close in, will it adapt in time, or become a cautionary tale of disrupted disruptors?

Investment strategies

Study supports what many suspected about passive investing

The surge in passive investing doesn’t just mirror the market—it shapes it, often amplifying the rise of the largest firms and creating new risks and opportunities. For investors, understanding these effects is essential.

Property

Should we dump stamp duties for land taxes?

Economists have long flagged the idea of swapping property taxes for land taxes for fairness and equity reasons. This looks at why what seems fairer may not deliver the outcomes that we expect.

Investing

Being human means being a bad investor

Many of the behaviours that have made humans such a successful species also make it difficult for us to be good, long-term investors. The key to better decision making is to understand what makes us human and adapt.

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.