Rick Cullen, a 75-year-old lawyer and director of the law firm Cullen Macleod, has never considered retiring.

Article by Euan Black courtesy of The Australian Financial Review.

Earning enough to lead a comfortable lifestyle is one of the reasons why Rick Cullen continues to run a law firm at the age of 75.

The director of Cullen Macleod says he has “expensive spending habits” that he would struggle to fund without selling assets if he stopped working. He likes fine wines and flying business class when he heads overseas.

“That’s part of it,” Cullen says. “But it’s probably more because I find work as interesting as it’s ever been.”

Cullen, who still puts in 40-hour weeks, says he likes spending time with his colleagues and sees guiding the firm to greater success as something of a life mission.

For him, the continuous learning offered at work holds more appeal than the endless leisure of retirement. He looks forward to going to work when he gets up in the morning. And although he enjoys gardening, playing the piano and playing tennis, he says he couldn’t do these hobbies all day.

“I never thought about retiring, I guess,” Cullen says. “I’m lucky that I enjoy my job. A lot of people probably don’t.

”Asked whether he has plans to retire in future, Cullen says he might think about it in five years. But he would rather not.

Meanwhile, 74-year-old Liz, who asked for her second name not to be published, also hopes to keep working for as long as possible.

After decades spent running small businesses, Liz has spent the past five years working part-time as an office manager for a Melbourne-based PR firm.

She keeps working mainly because “living on the pension would be so difficult” and medical expenses keep rising.

But she also believes that working at the firm keeps her young and “up to date with what’s going on in the world”.

“Everyone goes, ‘You know, we can’t believe you’re still working’. And I say, ‘I hope I’m working until the end actually’,” Liz says with a chuckle.

Wider trend

Rick and Liz are part of what’s shaping up as a wider shift in Australia, that of older workers taking an increasingly important place in the workforce.

In Australia people aged over 55 have been a key driver of the country’s labour market since the start of the pandemic, accounting for almost 40 per cent of the nearly 491,000 workers who joined the workforce between October 2019 and October 2022.

Over that timeframe, the proportion of Australians aged 55 to 59 who are either working or seeking employment jumped from 74.8 per cent to 77.5 per cent, while the same figure for 60-to-64-year-olds increased from 58.6 per cent to 60.5 per cent. Both increases were greater than the half-a-percentage-point gain seen across the entire workforce.

Australians have been extending their working lives for decades in response to longer life expectancies and the shift from manual labour to desk-based work that requires less physical effort. Research suggests that rising household indebtedness and the rise in the age at which we can access the pension have also encouraged us to push back our retirement.

But KPMG urban economist Terry Rawnsley says the rapid rate at which older Australians picked up work during the pandemic cannot be explained by a continuation of long-term trends alone.

“These numbers tend to be pretty stable,” he says. “So the fact you’ve seen two-or-three-percentage-point shifts since the onset of COVID at the start of 2020 is a really big deal.”

Rawnsley puts the shift down to improved job flexibility and limited travel opportunities.

“You have these people in an older age group who are kind of winding down, then COVID comes along, and travelling around the world [becomes less] appealing,” he says, later noting that border closures also cut off Australia from the rest of the world.

“So you have people who go, ‘Well, I don’t really want to travel around too much, and there are opportunities to remain in the workforce and kind of get engaged that way, and employers are flexible about the days of the week you work’. So it’s all kind of come together.”

Huge demand for workers

With unemployment at a 48-year low of 3.4 per cent and migration yet to pick up to pre-pandemic levels, employers know they must offer more benefits and greater flexibility to attract and retain workers.

Callam Pickering, Indeed’s Asia-Pacific economist, says that has made it much easier for older Australians to find the jobs and hours that suit their needs.

“Over the past couple of years, one of the driving factors [of older workers engaging in the workforce] is simply that there’s been so many jobs available,” Pickering says.

“There’s huge demand for workers, which means that there are opportunities for older people to find new jobs if they found themselves out of a job, or certainly to continue working for their existing employer under more favourable circumstances.”

The move to greater flexibility has been particularly helpful for older Australians who prefer to gradually transition into retirement by reducing their hours over time rather than abruptly stopping work altogether – a choice that Treasury’s Retirement Income Review in 2020 said “is becoming more common”.

Another factor that is likely to have encouraged older Australians to keep working is the rising cost of living. A study by research company Investment Trends found that only half of the workers aged 40 and over reported feeling “prepared for a comfortable retirement” this year – down from 75 per cent in 2021. Over the past 12 months, the proportion worried about inflation, which came in at 6.9 per cent over the year to October, rose from 28 per cent to 42 per cent.

The surge in inflation has also coincided with a sharp drop in superannuation returns. Balanced funds are on course to deliver returns of a negative 3.4 per cent return over the calendar year, which is the worst since the global financial crisis in 2008, according to Rainmaker Information.

Contrast with the world

Australia appears to have avoided the big exodus of older workers from the workforce that took place in some other developed countries when the pandemic hit.

The spread of a highly infectious and often debilitating virus would generally encourage older and more vulnerable workers to steer clear of the workplace. And that’s certainly what researchers observed in Britain and the United States. During the first 18 months of the pandemic, about 2.4 million more Americans retired than normal demographic trends would have predicted, while the proportion of Britons aged 50 and older who are defined as economically inactive rose steadily, bucking the historical trend.

Miguel Faria-E-Castro, a senior economist at the Federal Reserve Bank of St. Louis, and the man who calculated that 2.4 million figure, speculated in a podcast this year that older Americans were bringing forward their retirement because they were more susceptible to severe illness from COVID-19 and because the values of their pension accounts had risen thanks to surging asset prices. Other studies reached a similar conclusion.

However, by May 2022, the proportion of Americans between the ages of 55 and 64 who were working had recovered to roughly the same rate as that seen in February 2020, suggesting that fears of a permanent hit to the workforce had been overblown.

A similar reversal is also taking place in Britain, where people over the age of 65 are coming out of retirement to pick up part-time roles amid surging inflation – although workforce participation rates for Britons aged 50-64 are still lagging the pre-pandemic levels. The return of older people to the workforce in developed economies has been dubbed “The Great Unretirement”.

Ageism still rife

Natasha Ginnivan, a research fellow with the UNSW School of Psychology and an associate investigator with the Ageing Futures Institute, says older people thrive when they engage in meaningful work but are often held back by ageism in the workplace, in Australia at least.

Labour shortages during the pandemic might have forced some employers to put aside ageist attitudes to ensure they find enough workers to meet demand. But Ginnivan says age discrimination is still rife.

A survey of more than 600 business leaders by the Human Rights Commission and Australian HR Institute in 2021 found that almost half of the respondents would be reluctant to recruit workers over a certain age, with the age at which workers are considered “older” becoming progressively younger. In 2021, 17 per cent of respondents classified 51- to 55-year-old workers as “older”, compared with 11 per cent in 2018.

“I think our attitudes to ageing are still catching up with our biological longevity,” Ginnivan says. “There are some cognitive declines, but not to the degree that we exaggerate when we stereotype older people. [And] what happens also is that, as we get older, we develop this great ability for pattern recognition … and we completely write that off.”

Calls to soften pension rules

National Seniors Australia chief advocate Ian Henschke reckons ageism is the biggest barrier to employment for older Australians.

He says the second-biggest is how Centrelink penalises pensioners for earning over a certain threshold – although Treasury’s Retirement Income Review suggests these types of financial incentives do little to encourage people to stay in the workforce.

Unlike in New Zealand, where pensioners can earn as much as they like without it affecting their payments, older Australians have their pension payments gradually cut back if they earn above a certain threshold, which varies according to individual circumstances. In light of Australia’s continuing skills shortages, Henschke believes these taper rates should be softened.

“We’re not talking about asking the government to provide a universal basic income or a universal pension. We’re just saying adjust your settings, at a time when you need workers, to encourage people to work and not discourage them,” he says.

“We have a system that nudges people into not working because you’ll get penalised if you do if you’re on some form of social security.”

Liz is also critical of the rules. She works about 10 hours a week on average but would do more if it didn’t eat into her pension. “It gives you no incentive to work at all,” she says.

“And I think it’s really awful that the government does that.”

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