New research shows over one million Australians aged 45 to 65 are prepared to work up to 10 years longer in a new career.
Workforce trend could double super in retirement plus help skills shortage.
Is changing careers mid-life have benefits, especially for older Australians?
The Unleash Your Second Half: How Australians are Reimagining Retirement research found that more than one in three Australians aged 45 to 65 are considering a career change in the next few years – with a further 25 per cent saying they might consider it.
Australia has a huge untapped workforce of older Australians who would delay retirement for up to 10 years if they were able to switch careers and achieve a better work-life balance.
Furthermore, 58 per cent of people considering a career change would work longer in a new career than in their current line of work, with 46 per cent saying they would work up to 10 years longer and a further 11 per cent saying they’d work more than 10 years longer.
The trend means many older Australians could also double their super savings by switching to a career they are more passionate about.
The findings have implications for more than one million Australians aged 45-plus who are rethinking how they want to live the ‘second half of their life – but also for the broader economy as Australia battles acute workforce shortages.
Chief Executive Officer of Colonial First State Superannuation, Kelly Power, said middle-aged Australians were reimagining the ‘second half of their lives as a vibrant opportunity to pursue their passions and gain better work-life balance – and these trends are a timely gift for the country at a time when there are 423,500 job vacancies nationally (ABS figures February 2022).
She further commented:
"Our research shows that people don't see retirement as an end goal, but instead want to continue to learn, grow and explore – and that includes changing careers and remaining in the workforce for longer."
The main reason people want to change careers is to pursue something they are more passionate about (36 per cent), followed by wanting to improve their work-life balance (31 per cent) and wanting to earn more money (31 per cent).
Recent research from KPMG found that men aged 45 years old were expected to retire at age 65.2 years and women aged 45 years old were expected to retire at age 64.3. Combined with average life expectancies, KPMG estimated that men would have 17.3 years in retirement and women would have 21.6 years.
Ms Power said new thinking around retirement gave many older Australians the opportunity to continue to participate meaningfully in the workforce over a longer period, while substantially increasing their retirement savings.
Further, she explained:
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"Working longer has traditionally had negative connotations, but pursuing a career you are truly passionate about, or achieving better work-life balance, helps people stay socially and mentally active and, importantly, maintain a sense of purpose."
Modelling by Colonial First State found that by taking time off to retrain, then re-enter the workforce in a new role and working longer – people can almost double the super they will have by age 75.
CFS compared the earnings and savings trajectory of three 50-year-olds with an average salary and average same super savings of $150,000, who took different paths toward retirement.
The first person followed a ‘traditional retirement' path, stopping work at age 65.
The others took two years off to retrain before re-entering the workforce in a revitalised career, one working full time and the other working part-time (3 days per week) to age 75.
The person following a ‘traditional retirement’ path, would have $359,950 in their super fund when they retired at age 65 and then draw down income, depleting their savings to $301,783 by age 70 and to $252,961 by age 75.
The 'career recharger’, who re-entered work in a full-time capacity on a slightly higher salary and worked longer, would have $451,322 if they retired at age 70, depleting their savings to $378,477 by age 75.
If the ‘career recharger’ worked an extra 10 years after age 65, they would retire with $555,895 at age 75.
The ‘work/life resetter’ would re-enter work on a lower part-time salary and still retire with considerably more savings than the person who takes the traditional retirement path, with $338,940 at age 70, depleting to $284,148 by age 75.
However, if they continued to work for an extra five years they could retire with $403,715 at age 75.