The future of work in Australia, and what it means for your retirement.
According to the experts who study social and demographic trends in the workforce, Australia has some big changes underway in terms of our expectations of career or working life.
It’s no secret that working provides an income, which pays the bills. In Australia, where we have compulsory superannuation schemes, work also affects how we save for our retirement.
Current and emerging career trends include – teleworking, tenure shifts, multi-career expectations and the ‘gig economy’ and each will challenge the way younger generations will earn money, and, as a result their ability to save.
Right now, ‘baby boomers’ who first entered the workforce 60 odd years ago, had expectations of a job-for-life or at least a single career. Compulsory superannuation was introduced in the early 1990s. This has held many people in good stead as they get set now to retire. Of course, many baby boomers have also benefitted from Australia’s property boom and have accumulated wealth through their property assets over time.
Gen-Xers and GenY’s are likely to work longer
Generation X-ers –entered the workforce around the time superannuation was introduced, and Gen Y’s have had it all along. They have also benefitted from this compulsory saving scheme throughout their working lives to date. But these two groups have also seen property prices go up, costs of living increase and have not enjoyed much in the way of increased wages. The result for this group is that many will work longer than the expected retirement ages of 60-65 to ensure that they can adequately fund their retirement, because they are also expected to live much longer than previous generations – until at least 90 years of age.
The new ‘normal’ will be very different from life as we know it now.
However, other emerging trends will have a significant impact on the future of work too. Younger people, those who fall into the categories of ‘Milennials’ and ‘Generation Z’ face a whole different set of challenges.
The financial impact of multi-skills and multi-careers
‘Job mobility’ is one. It’s a term that’s been bandied around for a while now. Essentially, it means people are expected to change employers more regularly, on average every 3-4 years, perhaps even sooner. It also encompasses the expectation of multiple-careers. For young people this either means a big investment in study before entering the workforce (so they will start earning at a later age than previous generations) or take significant time out to study and then re-enter the workforce later on in life, potentially earning start-up salaries until they can prove their worth. Even though being multi-skilled should guarantee them better employment opportunities, more study will undoubtedly impact their ability to save, as well as increase their debt. Millennials have already been very vocal about their inability to afford Australia’s rising house prices, and so it’s also going to be much more difficult for this group to build a significant wealth base through assets like property.
The challenges of self-employment and sporadic incomes
Currently, about 2.4 million Australians are self-employed, and it’s likely that this trend will continue. The experts say that the rise of the ‘Gig Economy’, delivered through online-based services such as Airtasker, Deliveroo, Freelancer and Uber mean that many more of tomorrow’s employees will also be freelancers. It’s likely that they’ll work overseas for extended periods. Sporadic incomes also make it harder to save. As improvements in health care and nutrition continue, it’s also likely that these younger generations will have a much longer life-span. Whether they continue to work into their latter years will undoubtedly depend on whether or not they can afford to retire.
Achieving financial stability
It’s pretty unlikely that the compulsory superannuation scheme in its current form will be around when Millennials and Gen-Z-ers reach the point of considering retirement. They will need to be financially savvy with their earnings, and prepared for periods of unemployment. They will need to consider how to accumulate some wealth through investments if property remains out of reach. They also need to contemplate a comfortable retirement.
In the future, perhaps even more so than now, financial planning advice will become even more important as people adapt to new ways of working and earning a living so they can ensure financial stability, especially for their retirement years.
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