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Colonial reveals Australia's huge untapped workforce

The Colonial First State Unleash Your Second Half report stated 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.

Upon investigation, Colonial found a strong desire for personal fulfillment in both work and retirement. Accordingly, for more than one in three people this means changing careers in alter life and staying in the workforce longer.

"This societal trend has benefits that go beyond the financial," the report outlined.

"It offers people opportunities to stay social, mentally active and importantly maintain a sense of purpose."

Colonial First State chief executive of superannuation Kelly Power added: "Once thought of as an 'end goal', retirement for many Australians now represents a new beginning - a time to learn, grow and explore."

"Life expectancies are on the rise and medical advances have improved our general health, giving people more time to thrive in their later years."

In a survey of 1000 Australians aged 45-65, Colonial discovered this demographic was prepared to work up to 10 years longer in a new career. Evidently, research indicated that 58% of people considering a career change would work longer in a new role than in their current line of work.

"A mid-life career reset that allowed people to follow their passions could have a profound effect on retirement plans," the report said.

"This has implications for more than one million Australians aged 45-plus who may be rethinking how they want to live the second half of their life - but also for the broader economy as Australia battles acute workforce shortages."

Moreover, "Continuing to participate meaningfully in the workforce over a longer period could also give Australians the opportunity to substantially increase their retirement savings as delaying drawing down on super savings and maintaining contributions would have a powerful multiplier effect."

KPMG research has shown that men aged 45 years old were expected to retire at age 65.2 years and women at 64.3 years old, however, Colonial modelling specifies that a career change could extend working lives to age 70. Colonial is confident that such a workforce trend could help people almost double the super they have by age 75.

To illustrate its point Colonial modelling demonstrated that a 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.

Whereas a '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.

Responding to the report's findings, Power added: "Research amongst our nearly one million members shows that people reach a crunch point as they approach the second half of their life where stresses about family, employment and financial security converge with negative feelings towards the traditional concept of retirement."

"It is at this point where we have the greatest opportunity to help Australians achieve financial freedom so they can pursue the lifestyle they want and live a life full of purpose in their later years."

She concluded that older Australians needed specialised financial advice to help navigate the mid-life crunch. Advice such as assistance with cash flow management, tax planning, retirement planning and the management of social security.

"The financial advice sector understands there is an increasing need for specialist advice for older Australians to help them navigate a new road to retirement," she said.

Read more: AustraliaRetirementAdviceColonial First StateKelly PowerKPMG