Changing labour force ‘blurring’ line between work and retirement, says KPMG

New analysis of ABS Labour Force Survey data by big four firm KPMG shows that, in the last decade, the retirement age has risen as older Australians keep working, reshaping our preconceptions about retirement.

Later retirement

In the last financial year, KPMG has reported, the expected retirement age for men was 67 years, up by 2.2 years since 2014–15, and for women, the expected retirement age was 65.3 years, up by 1.1 years in the past decade.

This is potentially due to numerous factors, including increases to Age Pension eligibility over the past decade, contributing to the shift up in the expected retirement age, as well as older Australians who are staying in the workforce well beyond retirement age.

According to KPMG urban economist Terry Rawnsley: “Twenty years ago, one in 10 men were working at age 70. Today, it’s one in four. Even for men in their late 70s, almost one in 10 remains in the labour force.”

“The growth in ageless workers isn’t a recent phenomenon that spiked following the cost-of-living pressures of 2023–24. It is a longer-term trend that suggests a structural change to the concept of retirement.”

The increase in white-collar workers who can work longer in life could explain this evolution of retirement, KPMG said.

“Given the physically demanding nature of work faced by blue-collar workers, it is very challenging for them to continue working into their 70s. Pulling out a laptop in your 70s is much easier compared to laying bricks at that age,” Rawnsley said.

The remnants of COVID-19 restrictions are also a factor, the big four firm noted, in the rising retirement age.

“There was a slight drop in the expected age of retirement immediately after the end of COVID, as workers who had delayed extended travel due to COVID restrictions left the workforce. These ‘ageless workers’ have since returned from travel and rejoined the workforce, which also explains a rise in the participation rate for older Australians,” Rawnsley said.

The notable rise in workforce participation among older women and men further supports an evolution in the way Australians retire.

For example, the participation rate for women aged in their 70s in 2024–25 sits at 9 per cent, up from 5 per cent in 2014–15. For men aged 70, the participation rate is 14 per cent in 2024–25, up from 11 per cent in 2014–15.

“The labour force participation rates for women in their 70s are still about half that of men. However, they’ve been increasing rapidly, largely due to improved job flexibility in ‘knowledge-intensive’ roles and tighter labour market conditions,” Rawnsley said.

Semi-retirement from full-time work

Elsewhere, KPMG noted that structural changes to Australia’s labour force are “blurring what was once a sharp divide between work and retirement”.

For men, the expected age of retirement from full-time work is 64.2 years, but the the gap between leaving full-time work and leaving the workforce entirely has risen from 2.6 years in 2014–15 to 2.8 years in 2024–25.

Women’s expected age of retirement is 62.4 years.

“For women, the gap has typically been around three years, though it narrowed to just over two years during the pandemic as many older workers took on additional hours,” Rawnsley said.

“The adoption of working from home has made many older Australians in professional jobs realise they can ‘semi-retire’ and continue dabbling in the workforce part-time.

“More people now have the luxury of semi-retirement, where they can do part-time flexible work that can supplement retirement savings, support a more comfortable lifestyle, and even support their children and grandchildren.

“It also fosters social interaction and offers a sense of purpose by enabling individuals to remain engaged and mentally stimulated.”