Are you already counting down the months till your 65th birthday? Are you ticking off the calendar waiting for the day when you can wake up and officially declare to the world: “I’m retired!”
If so, you might want to hold on one second. Before you get ahead of yourself, you should know that there is currently a bit of debate over what the right retirement age is for modern Australians.
In November 2013, the Productivity Commission released a new report suggesting that Australia might actually benefit from gradually raising the retirement age from 65 up to 70 years of age.
In fact, the Productivity Commission believes that shifting the benchmark for receiving a national pension might actually be the key to dealing with our rapidly aging population, while also saving the country around $150 billion between 2025/26 and 2059/60.
If Australia was to raise the retirement age to 70, it would officially make us the country with the highest minimum retirement age in the developed world, ahead of countries like New Zealand (65), the USA (62-67) and China (60 for men, 50-55 for women). Even the UK, which has recently phased out its default retirement age of 65, still offers a pension to citizens as soon as they hit 68, at the absolute latest.
But if you’re thinking that your 70th birthday is just too far away, and that you’d prefer to jet off to a country that encourages its citizens to leave the workforce at an earlier age, you might want to think again.
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Why a higher retirement age isn’t such a bad thing
In Turkey – the country with the dubious honour of having the lowest retirement age in the entire world – people are entitled to retire with a full pension after making roughly 25 years’ worth of contributions to their retirement fund. That means a Turkish worker who gets his first job at age 20 and works consistently for the next 25 years could potentially retire at age 45!
That probably sounds like a pretty sweet deal, but the truth is that this excessive pension scheme is creating big headaches for the Turkish government. Having such a low pension age means there are more jobs available for younger Turkish citizens (particularly important in a country with an unemployment rate of over 9 per cent), but it also eats up a huge portion of the national budget, which could otherwise be going towards initiatives such as schools and infrastructure.
So, maybe hold off on buying that one way ticket to Ankara for now.
Other countries with strikingly low retirement ages include Greece (57), Italy (59, but rising to 65 by 2030) and France (60.5) – all countries that have struggled with rising unemployment in recent years, following the global financial crisis.
So, as it turns out, maybe having a high retirement age isn’t so bad after all. The fact that Australia is encouraging people to work longer is a sign of just how strong our economy is, and proves that most Aussies are living long, healthy and happy lives.
A retirement age of 70 would also give you a few more years to top up your superfund and – considering the average life expectancy in Australia is currently at just under 80 years for men and 84.2 years for women – you’d still have plenty of time to enjoy your golden years out of the workforce.
And keep in mind that just because the government sets retirement at 70 doesn’t mean you have to keep working until you hit that age. You can retire any time you like, so long as you have enough money to support yourself without a government pension until you hit that golden number.