The 100-year life is rewriting Australia’s retirement rulebook
Nick Hamilton
Australians could spend far longer in retirement than they expect, with new research by Challenger revealing the growing gap between when people leave the workforce and how long they may live.
New research from Challenger’s Institute for Lifetime Income shows that an Australian couple, both aged 65, now has a 43 per cent probability of at least one partner living to 95. At the same time, Australians who retire due to illness or injury do so at an average age of just 57, seven years earlier than those who retire voluntarily at 64.
The findings are being released as Challenger hosts leading scholars from the Stanford Center on Longevity during their Australian visit to discuss the New Map of Life research and its call for a new script for longer lives, with greater flexibility to move between learning, working, caring for others and retirement.
Stanford Center on Longevity Associate Director and Senior Research Scholar (Emerita), Martha Deevy, said the traditional expectations surrounding education, career and then retirement were developed for a world in which people lived much shorter lives.
“The 100-year life is here, but we’re still following a script written for a much shorter one,” Ms Deevy said.
“For generations, we’ve organised our lives around three distinct stages: education, work and retirement. But longer lives mean that model is no longer fit for purpose, with more time to learn, change careers, care for family and contribute to our communities.
“The New Map of Life recognises that life is rarely linear. It brings unexpected opportunities and challenges, and having the flexibility and confidence to navigate these changes is an important part of living a happy and fulfilling life.”
Challenger Chief Economist, Dr Jonathan Kearns, said Challenger’s research supported Stanford’s findings and highlighted the difficulty of planning for retirement when neither its starting point nor its duration could be predicted with certainty.
“The two biggest unknowns in retirement planning are when you’ll stop working and how long you’ll live. Both can have a significant impact on how much money you’ll need,” Dr Kearns said.
“Someone who expects to retire at 64 but is forced to leave work at 57 could face seven additional years without employment income. If they then live into their nineties, their savings may need to stretch across almost four decades.
“That’s a substantial financial challenge, particularly when inflation, investment returns and household circumstances can change considerably over such a long period. It means Australians need to plan for a range of retirement outcomes, rather than assuming their savings only need to last for an average lifespan.”
The research comes as approximately 300,000 Australians turn 65 this year, with that number expected to increase to 375,000 annually by the middle of the century.
Challenger’s Managing Director and Chief Executive Officer, Nick Hamilton, said: “Australia has spent more than three decades building one of the world’s largest pools of retirement savings. However, the size of Australia’s superannuation system becomes largely irrelevant in retirement.
“What matters is the individual. Great retirement outcomes are determined by the confidence that their savings will last their lifetime and the confidence to spend their income without fear.
“That’s the opportunity Stanford’s research puts in front of us. We have a chance to build on the strong foundations of Australia’s retirement savings system and help people make the most of longer lives, whatever retirement looks like for them,” Mr Hamilton said.
