How much of the retirement savings is used to generate an income
Retirement age
The average age of retirees in the 2019 Member Watch was 61.49 years. However, the average normal retirement age of the members was 63, which is an increase from 60.09 in 2012. The actual retirement age has increased by 1.40 years since 2012, which may be because most members reaching age 60 are not yet ready to retire as a result of insufficient retirement savings.
On average, members are retiring around two years earlier than their normal retirement age. Evidence suggests that people who work later are least likely to die early.1 People who retire earlier often report that they feel in poorer health and view their job loss in a similar way to people who have been retrenched. However, continuing to work can severely damage the health of those in physically demanding jobs. For this reason, it’s important to note that certain jobs do not lend themselves to later retirement.
Higher actual retirement ages coupled with increasing life expectancies and the increasing cost of retirement provide strong motivation for employers to consider increasing their normal retirement age.
When considering whether or not to increase normal retirement ages, the following points become important:
- Depending on the industry and, in particular, where intellectual and people skills are required, people can add value well beyond age 60, 65 and even beyond age 70. Extending the retirement age retains the knowledge and experience in the business.
- A global comparison of retirement ages and youth unemployment rates2 shows that there is no relationship between the two.
- When the employer is considering the retirement age, different retirement ages could be considered for different groups of workers. Other elements of the benefits package would also need to be changed to make sure that each group receives an appropriate package.
Extra time in employment could potentially be the saving grace, not only for the employee who now has extra time to save from income while in employment, but the entire family unit that relies on the ongoing monthly income and may potentially be dependent on the income in retirement.
Retirement age in each sector
Actual and normal retirement ages are shown below across the sectors.
Almost 62% of the members work in sectors where jobs are physically demanding. Since December 2012 the actual retirement age has always been lower than the normal retirement age in these sectors.
Across all industries, members are retiring far earlier than their fund’s stipulated normal retirement age. The greatest difference is in the fishing, forestry and agriculture sector, where the average normal retirement age is 64.02 but members tend to retire at the age of 60.75, three years earlier on average.