As retirement changes, we need better options

Age and retirement were once coupled – you left full time work at 65 and that was that, welcoming in a life of retirement. It was assumed work and leisure would never again meet.

Those days are ending according to a recent KPMG report, which shows both men and women are retiring later and are doing life after work differently.

We’re working longer. The report found in the last financial year the expected retirement age for men was 67 years, up by 2.2 years since 2014–15, and for women, the expected retirement age was 65.3 years, up by 1.1 years in the past decade.

The reasons are numerous and include increases to Age Pension eligibility over the past decade.

As well, older Australians are staying in the workforce longer, either permanently or part-time, well beyond retirement age. And there’s a cohort of retirees who want to return to a form of paid work but face taxation and pension barriers and the ageist attitudes of recruiters.

What can be done about that? Read on for our policy recommendations.

A feature of the new retirement landscape is the rise of the “ageless worker” - older Australians who are happy to stay in the workforce well beyond retirement age.

KPMG says this is an emerging long-term trend that suggests a structural change to the concept of retirement.

The expected age of retirement from full-time work is 64.2 years for men and 62.4 years for women.

For men, the gap between leaving full-time work and leaving the workforce entirely has risen from 2.6 years in 2014-15 to 2.8 years in 2024-25.

For women, the gap has typically been around three years, though it narrowed to just over two years during the pandemic as many older workers took on additional hours.

It’s believed the working from home (WFH) phenomenon has led older Australians in professional jobs to realise they can “semi-retire” and continue in the workforce part time.

WFH offers older people the chance to do part-time flexible work that can supplement retirement savings, a more comfortable lifestyle, and even help support their children and grandchildren.

“It also fosters social interaction and offers a sense of purpose by enabling individuals to remain engaged and mentally stimulated,” KPMG urban economist, Terry Rawnsley, said.

Primarily, the trend is being driven by white-collar workers who can work longer in life, while the physically demanding nature of work of blue-collar workers sees few of them working into their 70s.

The remnants of COVID restrictions are also a factor in the rising retirement age and rise in older worker participation, the report says.

There was a slight drop in the expected age of retirement immediately after the end of COVID, as workers who had delayed extended travel due to COVID restrictions left the workforce. These workers have since returned from travel and rejoined the workforce.

The report found the participation rate for women aged in their 70s in 2024-25 sits at 9%, up from 5% in 2014-15. For men aged 70 the participation rate is 14% in 2024-45, up from 11% in 2014-15.

The labour force participation rates for women in their 70s are still about half that of men. However, they’ve been increasing rapidly, largely due to improved job flexibility in “knowledge-intensive” roles and tighter labour market conditions, the KPMG report suggests.