More about retirement

Retirement is a relatively new concept.  Basically it was introduced for 2 reasons - firstly, to make room for new, younger employees.  Secondly, 65 used to be 'old'.  Getting to 70 was quite an achievement.

Back in the 1950s and early 60's the birth rate was high.   Families of 3 or 4 children was the norm.  These children are the 'Baby Boomers' and they are now in their 50s and 60s and either have already or are reaching the age of retirement. 

Problem is, Birthrates dropped significantly in the 1970s and 80s.  In effect, the 'supply chain' of employees is drying up!  Sure, there has been immigration to cover some of the deficit but this is not a long term solution.

The number of people of workforce age - categorized as aged 15–64 years, more than doubled between 1963 and 2020 to 3.33 million. It is projected to grow gradually, with the median projection indicating 3.83 million in 2048 and 3.94 million in 2073. In 2073, those aged 15–64 years would then make up 58 percent of the total population, down from 65 percent in 2020

The average age of death has increased significantly over the last 50 years.  Living into your late 80s and into your 90s is becoming common.  So, unlike past generations, that might mean over 30 years in retirement!

The infograph above shows the increasing number of older people in NZ.  Source - Better Late Life report,

Consider these facts:

  • In 1981, the median age of the NZ population was 28.  In 2018 it had increased to over 37!
  • in 2018, 16% of the NZ population was over aged 65, by 2034 this will have increased to 21% (1.2 million people)
  • in 2018 there were 86,800 people aged over 85.  By 2034 this will have increased to 178,800
  • Currently nearly 1 in 4 people aged over 65 are in paid employment

So this creates 2 challenges/opportunities (depending on your perspective)

  • For the individual - what is going to provide purpose and meaning (and income) after leaving full time work at the traditional age of 65?
  • For organisations - who is going to replace those who retire?  Where are the skills and experience coming from, particularly if it takes a number of years to acquire the required skills?

The 65+ dependency ratio (the number of people aged 65+ per 100 people aged 15–64 years)

  • was 14 per 100 in the mid-1960s
  • increased to 24 per 100 in 2020.
  • is projected to increase significantly, with the ratio expected to be in the range of 33–41 per 100 in 2040,

This means that for every person aged 65+, there will be about 2.8 people aged 15–64 in 2040, 2.3 in 2060, and 2.1 in 2073. This compares with 4.2 people in 2020 and 7.1 in the mid-1960s.

The population pyramids above illustrate the changes in the age structure of NZ.  There are some variables in the forecast for 2048 due to variabilities in future birthrates.

So what does all of this mean?

For individuals considering their post 65 life

Many people equate the State Pension eligibility with the need to withdraw from full-time employment.  Basically, hit 65 and retire.

Now, people can continue working to whatever age they want as long as they remain physically and mental capable of doing their job.

If you enjoy your paid work, why stop?

Or do you have a clear idea on how you would rather spend your time and resources?  Do you have a clear plan? Budgets? Goals and actions?

Have you considered all your options?

Maybe design a life where work futures but only some of the time.  You may want part time hours or project/seasonal based work.  You may want a career change and do something completely different!

If you are planning to follow a traditional retirement plan, what will provide you with purpose?  How will you structure your days?  What about the social interaction you have at work, what will replace that?

Putting some thought into your life-after-65 phase and developing a plan can be very helpful and provide you with a roadmap to follow when you need to.  Both practical and reassuring!

For organisations considering an aging workforce

Many organisations are already struggling to find employees with the right mix of skills, experience and attitude and many industries already have aging workforces.

Do you know how many of of your current employees are in their late 50s or 60s (or older)?  Of these, how many are likely to retire? If they were all to retire at 65 what is the likely impact on your business?

Do you have a plan in place to replace their skills and experience?  Do you have a succession plan?  Have you talked to them and explored options?

Does your organisation has any flexible work options or retirement transition policies?  Do you have a long term strategic workforce plan in place?

Research shows that working with your mature employees and having open discussions about retirement plans (which includes continuing work) not only increases their engagement but it can also increase productivity.  They no longer have to worry or even think about what will happen when they reach 65. 

Running retirement-living workshops for your employees as part of a well-being programme can start the dialogue

Choycz also offers consulting services to assist with workforce planning and implementing flexible work and transition to retirement processes and policies.

Contact us now for further details.

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