Age pension raised to 70

Older workers will need greater support

In the federal budget, the government confirmed its plans to raise the age pension eligibility age to 70 by 2035. This has spurred a lively debate as to whether it's fair, or even possible, for people to continue to work up until they reach this age.

Those who support the measure argue that increases in life expectancy are justification for a change. In addition, the large numbers of baby boomers who are now reaching retirement age will place increased demands on federal budgets for many years to come.

Not only will the annual bill for the age pension increase, but spending on other age-related expenses, such as health and aged care, will also rise. Combined with fewer people working and paying taxes, the result, if not properly managed, could be a perfect budget storm.

But beyond the economic rationale, there's no doubt a number of other factors need to be considered. It's difficult to predict what the health status of older workers will be in 20 years.

At present, many people reaching their late 60s are either unable to work or can no longer perform the roles they have been working in due to physical or mental health-related concerns or because they need to care for others. This is particularly pertinent for people such as labourers or aged care workers who have spent lifetimes working in physically demanding jobs.

While retraining these workers may sound good in theory, the reality is that the job market for older workers is often sparse.

Redesigning work practices to create a supportive environment for older workers will therefore be paramount if the increase in the pension eligibility age is to proceed. It's therefore encouraging also to see in the budget the government proposing a bonus payment to companies to hire and keep older workers.

Regardless of what happens to the age pension in the future, the best way you can guard yourself against potential changes is to be prepared. This means putting away as much super as you can so that you can fund the lifestyle you want in retirement, instead of being at the mercy of policy changes.

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