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Work till you drop

Saturday, 23rd November, 2013

By By Darrin Manuel

Push to raise pension age to 70

For many young Australians home ownership is viewed as an unattainable dream, and now it seems that a comfortable retirement may also be added to the list.

Yesterday the Government’s Productivity Commission suggested raising the retirement age to 70, a move that would produce savings of around $150 billion over 50 years.

The pension age is already being raised from 65 to 67, but Productivity Commission chairman Peter Harris wants it increased further to cover

Australia’s spiralling health and aged care costs.

While such a move represents good news for those already enjoying retirement, it shapes as another financial hurdle that has been placed in front of younger generations.

“I think that young people have always viewed retirement as a distant promise, and even as I’ve grown up it’s become more and more distant,” said 25-year-old BH Councillor and youth worker Jim Richards.

“I think with the way that our economy is structured, you soon won’t be able to retire unless you are wealthy or you are too sick to work.”

Mr Richards said the transitional nature of modern employment and a breakdown in workplace loyalty will also see younger people retire with less money in the bank.

“Employees are less loyal to companies these days, and companies are even less loyal to their own employees,” he said.

“This means that in the future you will have less people who have huge long service leave accrued.”

In June 2013, the number of young people reportedly looking for full-time work had increased to its highest rate in 15 years (27.3 per cent), while opportunities for teenagers to undertake full-time work have sharply declined over the last 25 years.

Another way the Productivity Commission said it could raise revenue was by taking a slice of retirees’ family homes.

The system would work by making invalid retirees hand the government half the yearly increase in their home’s value.

Once a pensioner needed assistance at home - or if their partner had to enter an aged care home - then half of the house’s appreciation in value would be earmarked for the government.

The money would then be paid to the government after the house was sold.

The thought of such a scheme may outrage many home-owners, but spare a thought for younger generations - they probably won’t even have a home for the government to garnish.

The average Australian house price is currently around $450,000. With a 10 per cent deposit, a $405,000 mortgage could demand $2,900 per month.

Given that the average worker on $57,000 receives $3,500 a month, it would be almost impossible to pay for basic essentials and make repayments.

Recent research has also shown that young people are renting more than ever and fewer have mortgages.

Financial pressures and unemployment have resulted in young Australians delaying independence from parents, marriage, starting a family and owning a home.

Mr Richards said it was now critical that young people are educated in financial matters at an early age to ensure they can amass enough wealth to retire.

“From an economic point of view, we need to help young people be as productive as possible by investing in them through activities like training, mentoring and flexible working arrangements. Young people today carry the economy of tomorrow.

“Young people should be encouraged to save for their own retirement, and the younger people are, the more they should be encouraged.”

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