A lot has changed since the Age Pension was introduced in 1908. Back then far fewer people lived to retirement age (the average life expectancy was 55.2 for males and 55.8 for females) and life expectancy for those retirees who reached Age Pension age was much shorter than today as shown in the following table:
LIFE EXPECTANCY (ADDITIONAL YEARS OF LIFE) FOR PEOPLE AT SELECTED YEARS OF AGE
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…………………………..Males Females
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…………….@0 @25 @45 @65 ..@0 @25 @45 @65
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1881-1890 47.2 37.1 23.0 11.1 50.8 39.7 25.6 12.3
1891-1900 51.1 38.9 24.0 11.3 54.8 41.7 26.7 12.8
1901-1910 55.2 40.6 24.8 11.3 58.8 43.4 27.6 12.9
1920-1922 59.2 42.7 26.0 12.0 63.3 45.7 29.0 13.6
1932-1934 63.5 44.4 26.9 12.4 67.1 47.2 29.7 14.2
1946-1948 66.1 45.0 26.8 12.3 70.6 48.7 30.5 14.4
1953-1955 67.1 45.5 27.2 12.3 72.8 50.2 31.4 15.0
1965-1967 67.6 45.4 27.0 12.2 74.2 51.2 32.3 15.7
1975-1977 69.6 46.9 28.3 13.1 76.6 53.1 34.0 17.1
1985-1987 72.7 49.5 30.8 14.6 79.2 55.4 36.1 18.6
1995-1997 75.6 51.8 33.1 16.1 81.3 57.1 37.7 19.8
2004-2006 78.7 54.7 35.7 18.3 83.5 59.2 39.7 21.5
2007-2009 79.3 55.2 36.3 18.7 83.9 59.5 40.1 21.8
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Source: ABS Australian Historical Population Statistics 2008 (cat. no. 3105.0.65.001); ABS Deaths, Australia, 2009 (cat. no. 3302.0)
The dilemma we all face now is that the Australian Government is unable to fund the Age Pension in its current form and things will need to change.
The Australian Government is likely to progressively extend the retirement age and reduce Age Pension entitlements. These changes will cause everyone to dramatically adjust their expectations and people will need to start saving significantly more over time in a low fee environment to eventually fund the lifestyle they each aspire to in retirement.