Australia | Mar 02 2009
By Greg Peel
Remember the Howard years? They seem an eternity ago. For those whose memory has faded, or for any recent school-leavers reading, economies can actually expand as well as recede, believe it or not. Stock markets can actually rise instead of fall. Not that prime ministers have anything to do with it.
It really was not that long ago that the Australian economy was booming and the country was facing a dire shortage of skilled workers. To that end, Howard introduced policies encouraging workers to stay on beyond the usual retiring age. This may have suited some who eventually did realise that golf is merely a good walk spoiled, or who couldn’t stand the thought of no longer having any respite from their spouse, or who simply hadn’t put away enough in the form of savings. But for many retirees – those who had sold their houses at the top of the property bubble and cashed in their super at the peak of the stock market, it was a case of disappearing contentedly into a cloud of campervan dust, with a subtle two-fingered salute to the boss, the kids, and the prime minister.
Oh how times have changed.
“Global information and insight group”, TNS, has just released a survey showing almost half of Australia’s baby boomers (44%) will now be postponing their retirement. It’s not hard to understand why. Some 59% of Australian boomers believe stock market (and thus superannuation) returns will decrease further in the next six months. The global financial crisis has forced a few changes of plan.
Australia’s economy is not in quite as bad shape as others, but only 23% of UK boomers see themselves delaying retirement, 28% of the French, and only 18% of Germans. The US is the only other country in the survey to come close with 40%.
I wonder what that says about compulsory super, the swings and roundabouts of which are left unchecked, leading to a retirement lottery. If you started work in 1960 you would have cashed out (at 65) at the top of the market. Your two-year younger sibling would be getting at least 20% less, or 50% less if all investments were in shares.
If the boomers are going to delay retirement, that means they intend to stay on at work. They had better not leave the job they’re in because it is now unemployment that is the problem, not employee shortages. And as far as doing their bit is concerned, don’t count on the boomers. According to the TNS survey, 71% of Australian boomers suggest they will need to cut back on spending in the next twelve months. Indeed, 40% of boomers are contemplating having to work more, rather than less, to protect themselves against the GFC. And 27% fear their job is already at risk.
At least the boomers aren’t quite as fearful as Gen X and Gen Y, 37% of whom fear they’re job is at risk. But watch out for an explosion of lollipop people.