How Australians live in retirement

It might be surprising to know that, on average, Australians are retiring in their fifties. For men it’s at 59 and a half years of age, and for women it’s at 52, according to Australian Bureau of Statistics’ retirement data from 2018-19.

That means we’re spending decades of our lives outside of paid work. So how are we living in those decades?

Just because Australians retire doesn’t mean they stay that way. People that retire often return to work, part time, casually or full time. This can be for financial reasons or for personal fulfillment.

And this trend has been increasing. The labour force participation rate of people aged 60 to 64 increased by 22 percentage points between April 2000 and April 2020, found the federal Treasury in its Retirement Income Review Final Report.

“Some transition with reduced hours of work, some retire many times as they leave and rejoin the workforce, and for some their retirement is involuntary due to ill health, caring for others or losing their job and being unable to find another,” stated Treasury in its report.

Living independently and in their own home is very important to Australians aged over 50, when considering retirement, reported Australian Seniors in The Quality of Life Report 2022.

And it’s what we’re doing well into our old age, with 99% of us aged 65 to 74 living in a private dwelling, according to the Australian Institute of Health and Welfare in its Older Australians report from 2021. (As we age beyond 74, we increasingly move into nursing homes and retirement accommodation, but remain mostly in our private dwellings into our 90s.)

We’re also doing what we can to maintain our independence: “The large majority of older people who are living independently enjoy happy, healthy and active lives. They make lifestyle choices to keep themselves independent and healthy as long as possible, including spending time exercising,” reported the Royal Commission into Aged Care Quality and Safety in 2020.

Of Australian couples aged 65 and over, 92% owned their home, while 75% of single people owned their home, according to the Australian Institute of Health and Welfare. But it notes that since 1996, home ownership rates for the 50-to-54 age group has fallen by 8 percentage points, from 80% to 72%.

The main source of income for most of us in retirement, reports the ABS from its retirement data, is the government age pension. The maximum fortnightly pension rate, including supplements, is slightly more than $1000 for singles and $1600 for couples.

Superannuation is a close second for retired men, with 30% relying on it as their main source of income. For women, 17% principally depend on their superannuation, while “36% of retired women relied on their partner’s income to meet their living costs”, reported the ABS.

A basic fear that many of us have, that we’ll run out of money once we stop working, isn’t true. Not only do we overestimate how much we need to have in superannuation for a comfortable retirement, but we’re dying with around 90 per cent of the assets we began retirement with, because we’re living on the income from those assets and leaving the assets themselves intact.

We’re reducing spending so much, the government stated in a recent retirement paper, that retirees actually reduce their standard of living. In fact, so much money is left in their estate that by 2060 it is projected one third of all the money paid out of superannuation will be a part of a bequest, that is, it will go straight to the beneficiaries you’ve chosen (if you’ve set up a binding nomination).

Having “good physical health” is the leading determining factor in quality of life in retirement for Australians aged over 50, Australian Seniors found in its survey.

And there’s no wonder it’s a concern for ageing Australians, with the proportion of those with a long-term health condition increasing with age, according to the ABS 2021 census data:

• 61.4% of people aged 65 to 84 years had a long-term health condition

• extending to 73.1% of people aged 85 years and over

• with arthritis and heart disease the most common conditions among those in their 70s and 80s.

However, more recent research from the Australian Institute of Health and Welfare found dementia has overtaken coronary heart disease as the leading cause of disease burden among Australians aged 65 and over. In 2022, 401,300 of us were estimated to be living with dementia. This number increased by 4% from the year prior and is expected to more than double to 849,300 in 2058.

Our finance and our health are priority areas to look after and manage well as we prepare for our lives after work as these are determining factors in our quality of life in later years. Australians can take comfort from the fact that the majority of seniors, including even those in their late 90s manage to stay in their own home, indicating both their health and finances are holding up well enough to enable this.