Retirement intentions and labour force participation by older workers

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Retirement intentions and labour force participation by older workers

Posted 10/12/2013 by Kai Swoboda

On 9 December 2013, the Australian Bureau of Statistics (ABS) released the results of its 2012–13 survey on retirement and retirement intentions. The data collected by the survey provides information on retirement trends, the factors which influence decisions to retire, and the income arrangements that retirees and potential retirees have made to provide for their retirement. Another indicator of retirement behaviour is the participation by older workers in the labour force.

Labour force participation amongst older workers has increased significantly over the past 15 years, particularly among females (Figure 1). The decision to retire is an important factor in understanding whether such an increase will continue into the future.

Retirement is usually defined in terms of leaving full-time work and withdrawing from paid labour upon meeting the age pension eligibility age. However, retirement is also seen as not just a withdrawal from paid full-time work but also a lifestyle change, often to unpaid caring duties, part-time or voluntary work.

Key results from the ABS’s 2012 survey on retirement and retirement intentions include:

  • Of the 1.5 million men who had retired from the labour force, 25% had retired aged less than 55 years; 50% had retired aged 55-64 years; and 25% had retired aged 65 years and over. Of the 1.9 million women who had retired from the labour force, 55% had retired aged less than 55 years; 36% had retired aged 55-64 years; and 9% had retired aged 65 years and over
  • For men, the most commonly reported main source of personal income at retirement was a ‘government pension/allowance’ (51%), followed by ‘superannuation/annuity/allocated pension’ (25%). For women, the most commonly reported main source of personal income at retirement was also ‘government pension/allowance’ (42%). Only 10% of women reported ‘superannuation/annuity/allocated pension’ as their main source of personal income
  • Of the 4.7 million people in the labour force who indicated that they intend to retire from the labour force, 1.4 million people (37%) did not know the age at which they would retire (34% of men and 42% of women). Of those who did indicate an age: 
    • 17% intend to retire aged 70 years and over (19% of men and 15% of women);
    • 49% intend to retire aged 65-69 years (53% of men and 45% of women);
    • 25% intend to retire aged 60-64 years (22% of men and 29% of women); and
    • 9% intend to retire aged 45-59 years (7% of men and 12% of women).
  • For those in the labour force who intend to retire, the most common main factor influencing their decision about when they would retire was ‘financial security’ (39% of men and 36% of women), ‘personal health or physical abilities’ (23% of men and 23% of women), and ‘reaching the eligibility age for an age (or service) pension’ (13% of men and 11% of women).
Retirement behaviour is important to policy-makers across a broad range of areas. These include understanding the budget implications of expenditure such as the age pension and other social security payments, and the impact on the operation and growth of the superannuation system. Decisions about retirement also have broader economic implications on labour participation and productivity and social effects on health and caring in the community.

Similar retirement and retirement intentions surveys were first carried out by the ABS in 1983 and 1984. While the results of these earlier surveys are not directly comparable with the 2012–13 survey, the following general conclusions can be drawn about changes in retirement decision-making over the past 30 years:
  • For those who had retired, age at retirement increased for both males and females. For example, in 1983 around 80% of females had retired by the age of 55 compared to less than 60% in 2012
  • For those who had retired, the proportion of retirees nominating illness or injury as the main reason for retirement increased (15% in 1983 to 23% in 2012–13)
  • For those who had retired, those nominating superannuation as the main source of income at retirement more than doubled (9% in 1983 to 25% in 2012–13), and
  • For those who had not yet retired (but intended to do so), the proportion that did not know what age they would retire was unchanged between 1984 and 2012–13 (around 37%). However, the proportion of females who did not know increased (12% in 1984 to 20% in 2012–13) but the proportion of males who did not know decreased (26% in 1984 to 18% in 2012–13).
Going forward, some areas of interest to policy makers from the 2012–13 survey will be how factors such as industry and occupation of those intending to retire are affected by structural changes in the economy. Also important to policy makers is how changes to age-based thresholds for accessing the aged pension and superannuation may be affecting retirement planning.


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