No pension until 70? What it could mean for you.

The retirement plans of millions of Australians could be affected due to proposals that consider raising the minimum pension age to 70. Recently, Treasurer Joe Hockey supported the move by the British Government to increase the state pension age to 70 for those now aged under 30. The challenges of supporting an aging population aren’t going to go away – and Australia needs to be prepared.

As Australia’s aging population continues to rise, discussions are increasing surrounding the effect this is going to have on our budget.

When the Age Pension was originally introduced in 1909, a 65 year-old Australian could expect to spend between 11 and 12.9 years in retirement. Nowadays, men of the same age can expect to live for almost 19 years, while women are likely to live almost 22 years longer1.

With the number of Australians aged over 65 set to increase to over 4 million in 2022, the Government is considering the best ways to support a growing population of retirees2.


More time at work

To cope with the impact an aging population will have on our economy, the Productivity Commission recently advised that the Government increase the age pension access age from 65 to 70 by 2035. It was argued that this could save taxpayers $150 billion from 2025-26 to 2059-603.

Even now, the Pension age is set to rise to 67 in 20233.

A similar solution was proposed by a the Grattan Institute, which suggested increasing the eligibility age for both the age pension and superannuation by six months a year until it reaches 70 in 20254.

However, there are seniors groups who are warning that an increase in Pension age could hurt older people who are struggling to find work and may result in more people turning to the dole or Disability Pension. Some are of the opinion that it will merely shift people from one form of welfare to another and that raising the pension age is a simplistic approach to a deeper problem – not a solution.

Whether or not this action will even go through, nobody knows. Nevertheless it is worth thinking about what you would do if you had to work for longer – and consider the most cost-effective ways you could move from your working life into your retirement.


Part – Pension

Some Australians eligible for the Age Pension continue to work, whilst receiving a part Pension. This can potentially mean discounted medicine under the Pharmaceutical Benefits Scheme and state/territory based concessions (i.e. discounted utility bills, cheaper car registration etc).


Transitioning into Retirement

Perhaps easing into retirement will suit your needs better? If you are aged between 55 and 60 and meet certain requirements, you may be able to adopt a Transition to Retirement strategy whereby you keep working, whilst drawing a Pension from your Super account. There are tax advantages to this strategy; however, it’s important to be aware of the eligible criteria and a qualified expert can recommend the most appropriate strategy for you.


If you have any queries relating to the Age Pension or retirement planning, please seek the advice of your Financial Adviser.

3 The Productivity Commission

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