The baby boom reaches retirement: Changing what retirement means

Retirement is a stage in life that we look forward to after years of hard work. However, the traditional view of retirement as a time of complete leisure—travelling, reading and pursuing undemanding hobbies—is no longer realistic or in fact, desirable for many. Seventy is the new forty, great adventure can be experienced by anyone, and social connections are just a click away.

Happy retired couple jogging
Reading time: 5 min

A generation is coming through that can still climb mountains, re-educate, create powerful and original art, and even play professional football (see Kazuyoshi Miura, who continues playing professional soccer at 56!). At Inviva, we think many over 55s have much to contribute and still want to work.  

So why is this important? Our rapidly increasing ageing population presents societal challenges. The population pyramid, a visual representation of the population for each age group, is no longer as broad at the base as it once was. The post-war baby boom hasn’t continued, and this has created a middle-aged cohort that bulges out the pyramid. As a result, there is a predicted peak of 137,000 people set to retire in 2026, a huge step up from the 40,000 yearly average in the 90s. So, with more people retiring each year than there are new additions to the workforce, it creates a shortfall of working adults funding the growing number of retirees. This, in turn, will inevitably affect the government's ability to provide support for retirees. Rising costs and a desire for a comfortable retirement means that more and more retirees will have to find income sources through their golden years.  

We think this can be approached in a few different ways. To be clear, it is unlikely that increasing the pension age or reducing pension payout amounts would suffice. Australia’s pension eligibility age of 67 is already comparatively high compared to our peers, and increasing pension amounts substantially with a smaller workforce would not be economically feasible. Therefore, we should shift the perception that retirement is a time of complete leisure. Instead, improved healthcare and longevity means that more Australians can continue to participate in the workforce by taking on part time, flexible or remote roles, alongside the long awaited leisure time they have worked hard for.

What’s the takeaway message?

We think the next wave of over 55s should be ready to support themselves through a longer lifespan where a comfortable retirement cannot be completely supported by the age pension. The changing workforce dynamics which enables flexible working allows over 55s to continue working, even in a reduced capacity. However, the intricacies of our tax system means it is important that soon-to-be retirees take the time to grow in financial literacy, and get the support to understand what works best for them. The options for being financially secure are numerous but aren’t always suitable or understood. Options such as reverse mortgages, withdrawing superannuation, living in a retirement community, and gifting assets to children and loved ones need to be carefully thought through.  

Inviva’s flexible Equity Empower loan has helped many over 55s achieve some of their dreams. Equity Empower is an equity release loan with approvals based on assets and credit history, not income. It can help over 55s who have paid off the mortgage on their home to maintain the lifestyle that they want while remaining in their home. Any appreciation of assets and property remains with the home owner, something that wouldn’t happen if the property was sold or downsized. With a maximum loan amount of $2,000,000, flexible repayment options, and the ability to drawdown as and when you need it Equity Empower allows homeowners the flexibility to secure their financial freedom in the way that best suits their needs.

Check out our product page or ask your financial adviser about us for more information.

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