Longer lives challenge Australia's retirement model

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Australians could spend close to four decades in retirement, raising questions about how well the nation's retirement system accommodates longer lives and increasingly…

Australians could spend close to four decades in retirement, raising questions about how well the nation's retirement system accommodates longer lives and increasingly unpredictable exits from the workforce.

Research from Challenger's Institute for Lifetime Income found a 43% probability that at least one member of a 65-year-old Australian couple will live to 95. However, retirement does not always begin as planned, with Australians leaving work due to illness or injury doing so at an average age of 57, compared with 64 for those retiring voluntarily.

The findings coincide with an Australian visit by scholars from Stanford University's Centre on Longevity, whose New Map of Life research advocates a more flexible approach to education, employment, caregiving and retirement.

Standford Centre on Longevity associate director and senior research scholar emerita Martha Deevy said traditional life stages were built around shorter life expectancies.

"The 100-year life is here, but we're still following a script written for a much shorter one," Deevy said.

She said longer lifespans created opportunities to change careers, learn and care for family, making a linear progression from education to work and retirement increasingly outdated.

Challenger chief economist Jonathan Kearns said the uncertainty surrounding retirement timing and longevity made financial planning more difficult.

"Demographics may be destiny, but for individuals the path to retirement is far less certain" Kearns said.

He said unexpected early retirement could leave individuals with additional years without employment income, while those living into their nineties will need to draw on their retirement savings for longer.

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