Retirement Life
9 May 2024
Redefining the age of retirement
The ‘golden years’ is a term synonymous with the period of life when people leave the world of paid work and enjoy the newfound freedom to structure their days as they choose. Retirement, in other words. A new study by agecalculator.com has turned the spotlight on a remarkable shift in the age at which these so-called golden years begin. And New Zealand emerges as a standout.
The long-working Kiwis
Based on OECD data spanning two decades, the report unveils a marked increase in retirement ages worldwide. To be clear, retirement age in this context does not mean the age of eligibility for a government pension (currently 65 for Kiwis), but when people choose to leave the workforce.
New Zealand, the lone non-European contender among the top ten, has seen a significant 10% jump in our retirement age, from 61 to 67 years between 2000 and 2020, indicating a significant proportion of older Kiwis are opting to delay their retirement. On top of this, the 25% workforce participation rate among our over 65s is the highest in the OECD.
Source: OECD data
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Global trends and challenges
A spokesperson for agecalculator.com points out that the trend for rising retirement ages reflects a complex interplay of various factors, including “the extension of people’s life expectancy, which has increased thanks to medical advancements, economic pressures that [mean] people [aren’t] able to retire comfortably because of the rising cost of living, and shifting demographics, such as declining birthrates and aging populations”.
Flexibility and choice
In an interview with RNZ, Michelle Reyers, Retirement Commission Policy Lead, attributes NZ’s position in the retirement age rankings to positive policy changes made almost a quarter century ago, including measures that encourage employers to improve workplace flexibility for older workers. The fact NZ Super isn’t means tested also helps as seniors are not disincentivised to keep working beyond 65.
“New Zealand has a number of policies in place that encourage older people to continue in paid work that don’t exist in other countries. And this is giving people flexibility and choice to decide when they’re going to exit from paid work,” she told RNZ.
Lessons from the OECD’s pension review
According to the OECD’s most recent report on pensions, the share of the OECD population aged 65 and over is projected to hit 27% by 2050. Promoting the employment and employability of older workers will be key to both ensure the sustainability of pension systems and address labour market shortages.
However, the report notes that many older workers struggle to keep their skills up to date, have limited access to good-quality jobs, and risk having an inadequate pension in old age because of short and unstable working careers.
OECD Secretary-General Mathias Cormann said “By providing targeted support for training and ensuring healthy working conditions, countries can improve the employment prospects of older workers. This will help ensure that pension systems remain financially sustainable, while delivering decent incomes in retirement.”
We have our own challenges posed by an ageing population and the longer-term affordability of our government-funded superannuation. But when it comes to fostering an environment where older Kiwis are empowered to choose their own retirement timelines, it appears we’re a step ahead of our peers.
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Written by:
Vanessa Glennie
Vanessa is Head of Communications at Lifetime Retirement Income. She’s an experienced investment writer, having spent more than a decade writing about financial markets in the global fund management industry.
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