In a recent column I introduced the idea of the retirement cliff, which detailed the jobs that would lose the most workers to retirement in the next decade.

The Australian Bureau of Statistic (ABS) have recently released the latest data regarding retirement.

Using that data, we will look at the big picture findings to see how retirement has changed and how these changes affected Australia as a whole.

On average, the 4.2 million retirees that currently live in Australia retired at age 56.9. When the ABS asked current workers when they plan to retire, respondents expected to stop work at around 65.4 years – showing early retirement is no more.

The commonly perceived retirement age of 65 hasn’t been the norm in the past three decades as people retired in their mid-50s. A person in their late-80s might well have been in retirement since the early 1990s.

Generational research shows that the longer we live, the more time we spend in each stage of the lifecycle. We stretch out adolescence well into our 30s, for example. We are, of course, adults in a biological sense, but only take on adult responsibilities of caring for children or paying a mortgage in our 30s.

In this sense we can view the 20s as a decade of adolescence. As more Australians acquire multiple tertiary degrees, we pushed the start of our working life into the mid- or late-20s. This means we must work until later in life which pushes retirement age further out.

Women tend to leave the workforce earlier than men, but everyone now retires a bit later. In 2021, the average retirement age for women was 54 years but rose to 54.7 years in 2023.

The increase for men wasn’t as steep but men already retired five years later than women (59.3 years to 59.4 years).

In 2022 reality had hit and fewer people retired early. Around 128,000 people retired in 2022, with an average retirement age of 64.8 years. Men retired later at 66.9 years, while women retired almost four years earlier at 63.2 years.

The ABS asked when people plan to retire, so we can estimate the gap in the workforce that needs to be filled at the other end.

Succession planning on a national level so to speak.

It is now time for the biggest birth cohort, the Baby Boomers (born 1946-63) to retire. The first Baby Boomer turned 65 in 2011, the last Boomer will hit this milestone in 2028. Let’s add about five years to either end to roughly see the window in which Baby Boomers retire.

Replacing these retiring workers will continue to be a challenge for the Australian economy (as I explained in a piece last year) and was always going to happen.

While the mass retirement of Baby Boomers continues to be hard for Australian employers, the introduction of superannuation in the early 1990s ensured it won’t break the pension system. In this sense superannuation is proof that our political system can think decades in advance, rather than just focussing on the next election cycle.

There aren’t Australian retirees yet who paid into their superannuation account throughout their full working life. Only in about a decade, when Gen X (born 1964-81) retires, will retirees have contributed to their super with every paycheque.

The positive effects of the superannuation scheme are already visible. In 2014 only 20 per cent of retirees fully funded their own retirement through super, while by 2023 this number already rose to 27 per cent. From now on the share of self-funded retirees will only go up.

The ABS data also confirms a few other suspicions you might’ve had about retirement.

People who can work more hours from home are intending to retire later. If you can switch to part-time work, you tend to retire later too. If you can switch to contract work, you work a bit longer to cash in on the higher rates you’ll be paid.

This occurs in the context of a larger share of workers having sedentary jobs rather than physically challenging jobs on the tools.

Rich folks retire sooner. Hardly a surprise.

Of all people that retired when aged under 55, 12 per cent drew a high household income of over $2000 per week. For people who retired after their 70th birthday that ratio sank to 8 per cent.

There are many reasons why we work and why we stop working but the most important one remains money. If we have enough money to not work, many of us will choose to not work anymore or at least to work less.

The two most common reasons to re-enter the workforce after retirement are financial needs and boredom.

There are more insights buried in the ABS retirement data, but for now these few gems must suffice and I want to leave you with a little reminder about the current cohort of retirees.

It’s a diverse group of people whose wealth stretches across the full spectrum, but as a group retirees are getting richer.

The stereotype of poor, penny-pinching pensioners must be updated. Baby Boomers are asset rich (they very much tend to own their own home) and hold the biggest share of cash savings – they benefit from high interest rates and won’t slow their spending any time soon.

For marketers, young retirees (let’s say until their mid-70s) are a dream cohort to target.

For the Reserve Bank the retiring Baby Boomer cohort is a headache.

The RBA desperately want us all to spend less money to get inflation under control, so a bunch of retirees that stopped spending would be welcome but is very unlikely.

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His latest book aims to awaken the love of maps and data in young readers. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.