Research Note: How retirement dynamics are shifting with Australia’s ageing workforce

As Australia's workforce gradually ages, retirement transitions are having a greater impact on employers and the labour market. In the mid-1990s just 3% of Australian employees were over the age of 60, but by 2026 the share has risen to around 10%. As these employees retire, they will have a major effect on how we sustain and renew the workforce.

In our recent research on Australia’s ageing workforce we explored how older employees have become an increasingly important cohort in the labour market. Workforce ageing is driven by demographic change and increasing women’s participation, with concentrations of older workers becoming prominent in industrial sectors and traditional occupations.

This concentration matters because ageing workforces also have an increased risk of clustered exits, where a group of retirements removes a share of experienced staff in a short period. For the most exposed industries, early succession and workforce planning are critical to managing unplanned business capability loss.

How well businesses can plan for that exposure depends on what factors lead them to retire, and how different groups of employees step through the transition. Retirement practices are not one-size-fits-all, with major differences associated with gender, occupational and personal factors.

This research note draws on the Australian Bureau of Statistics retirements microdata to look beyond the headline numbers. It examines the dynamics driving retirement decisions and how businesses can use these insights to support workforce planning. It examines industry exposure, the changing reasons behind retirement, the differences between why men and women retire, and the accuracy of stated intentions across age cohorts.

Retirements rates vary widely with workforce demographics

As the workforce ages, retirements have become an increasingly significant factor shaping Australia’s labour market. Over the five years to 2024-25, 834,000 people retired from formal employment. This represents 6.8% of the current Australian workforce, or an annual retirement rate of approximately 1.3%. The average age at which people retire is currently 63.8 years, a slightly increase on a decade ago when it was 61.0 years.

However, retirements are not evenly distributed across the Australian labour market. As we explored in a previous research note there are major demographic differences between industries, with some having a much greater share of older workers than others. Retirement ages also vary between employee groups, with some such as women tending to retire at earlier ages.

As a consequence, there are wide differences between retirement rates across industries (Figure 1 below). Rates tend to be higher in two groups.

• The first are industrial sectors such as agriculture, transport, manufacturing and construction. These industries have older than average workforces, and also feature many physically-intensive occupations that often result in earlier than average retirements
• The second are white collar service industries such as administrative services, other services and public administration. These industries also have older than average workforces, as well as a greater share of female employees, who tend to retire earlier than average.

At the other end are a group of lower-retirement industries, such as accommodation & food, professional services, mining and finance. These industries have low retirement rates (below 5% on a 5-year basis) because of their comparatively younger workforces. Employees in these industries often shift to other industries in the later stages of their working life, meaning relative few leave the industry via a retirement pathway.

Financial considerations increasingly more important than social factors

Retirement transitions are a complex social process, reflecting a wide range of personal and employment considerations for the individual. However, when considering the factors behind retirements decisions – Figure 2 below – we can broadly group them into two categories – financial and social.

Financial factors are slightly more important in determining retirement decisions. Considerations around financial security (35%) pension eligibility (17%) and accessing super (4%) together account for 56% of retirement decisions. They have become more significant in recent years, rising from 48% of factors a decade ago. This lift in financial factors is in part due to the maturation of the superannuation system – employees retiring today will now have spent the majority of their working lives accumulating super.

Social considerations comprise most of the remaining 44%, with a diverse array of factors involved:

• Health remains a significant reason for retirement, but its relative share has fallen - from 29% a decade ago to 24% in 2025. Improvements in health and physical ability, workplace flexibility, and greater adoption of automation and technology are helping older workers stay attached to the workforce for longer.
• Personal leisure time, time with family, job stress, declining interest in work and caring responsibilities have all remained comparatively minor and broadly stable influences across the decade.

Importantly, an older workforce that increasingly retires based financial rather than personal reasons is more sensitive to changes in economic conditions. Changes to living costs, superannuation and investment balances and house prices therefore have a greater influence on retirement decision making than in the past. Employers should therefore expect a more volatility in retirement practices, as changing economic conditions delay or bring forward decisions.

Gender is a key determinant of how and when employees retire

However, within these retirement factors we also find major gender differences. Survey data shows that women and men retire for different reasons, and understanding that divergence is critical to business workforce planning capability.

Some retirement factors are broadly gender neutral and impact equally on both women and men. These include health considerations, access to super/pensions, redundancy and spending more time with family. However, other reasons display marked gender differences:

• Women are more likely to retire in response to family dynamics. These include a partner's retirement, caring responsibilities for family members, and their partner’s income. They also report higher rates of retirement due to job stress, which may intersect with caring responsibilities. Overall, women’s retirement decisions are more likely to be shaped by their relational and household roles.
• In contrast, men’s decisions tend to be more individually focused. Financial security, a declining interest in work and desire for more leisure time are more prominent factors for men. They are also far more likely to report never intending to retire, which may be connected to issues of professional and personal identity.

These differences mean retirement dynamics are highly impacted by gender composition of the workforce. Female-dominated parts of the workforce, particularly in industries such as administrative services and care, is more likely to see retirement timing shaped by reasons tied to relational factors to do with the family. Male-dominated parts such as the industrial workforce are likely to see financial and individual factors predominate. Some male-dominant workforces may have a meaningful cohort that is resistant to retiring at all.

Many full-time employees intend to transition to part-time roles

One area where there are prominent gender differences are in pre-retirement transitions. It has become increasingly common for full-time employees to shift to part-time roles as part of transition to retirement plans. These enable older employees to stay engaged in the workforce for longer, particularly for those who face health issues or caring responsibilities as they approach their intended retirement age.

While previously rare, such transitions appear to be increasingly popular. Among current male full-time employees who have a retirement plan, 33% intend to transition into a part-time role before retirement, and another 35% are unsure regarding this transition. Only a third definitively expect to stay full-time until retirement. Amongst women the numbers are slightly higher, with 37% planning to shift to part-time and 29% intending to stay full-time.

This data suggest that the number of people making pre-retirement part-time transitions will increase in coming years. Our prior research has found that such transition have played a key role in extending working lives, contributing to the steady increase in the average retirement age over the last decade. They are particularly important for women, for whom part-time hours become the dominant for employees over 60.

As part-time transitions become more common, this will help manage retirement risks for both employers and employees alike. Employers will be able to maintain experienced staff for longer and facilitate more skills transfer to younger cohorts, while employees will enjoy the financial and social benefits of longer workforce engagement.

Around half of older employees lack clear retirement plans

One of the most surprising features of retirement dynamics is the number of older employees who lack clear retirements plans. Around a third of older men and 40% of older women state they are unsure when they will retire from the workforce, with a further 10% reporting they have no current intention to retire. This means that around half of the workforce cohort who are approaching retirement do not have a clear plan for retirement, or an ability to signal their intentions to their employer.

Moreover, ability to signal exit plans does not materially improve with age. Amongst the 60-65 cohort (the group reaching the preservation age of 61 for accessing super) with 44% of men and 51% of women lack firm retirement plans. Amongst the 65-69 cohort (they group reaching the age for accessing the age pension of 67) – half of women and two thirds of men lack retirement plans.

This large ‘no plan’ group introduces a significant degree of risk for both employers and employees. Employers face uncertainty when looking at intentions about both who will retire and when, since a large share of the workforce most exposed to retirement cannot offer an indication of their intended timing. Employees also face personal risk in lacking clear retirement plans, which may result in rushed exits due to changing health, financial or family situations.

Retirement plans are often inaccurate and under-estimate retirements

Compounding matters, the retirements plans of those with one often under-estimate the likelihood of retirement. Figure 5 below measures the accuracy of retirement plans, by comparing the five-year intentions of different age cohorts with the number of people who subsequently retired over that period.

The analysis finds that employees under the age of 60 have relatively inaccurate retirement plans. Among employees under 60, for every 100 individuals who plan to retire within five years 175 individuals subsequently do. This suggests that for this group around 40% of retirements - 170,000 people per year – are unplanned. This is likely due to sudden health, employment or family changes that necessitate an unplanned exit from the labour market.

It is only from the age of 60 that retirement plans begin to match actual retirement outcomes. For employees over 60, for every 100 individuals who plan to retire within five years, 101 subsequently do. This is a very high rate of intention accuracy, which likely reflects life stage threshold effects occurring around this time. Planning around the preservation age of 60 acts as a trigger for employees to consider their financial situation, develop and act on retirements plans.

This problem – that under 60s under-estimate their likelihood of retiring – compounds the difficulties of employees without retirement plans. Employees in this group are at much higher risk of unplanned retirement, with implications for both their personal circumstances and continuity planning for their employers. Additional attention and conservatism should be directed toward planning amongst this group, particularly those in the 55 to 59 year cohort.

However, it also reveals that over 60s are relatively good at predicting when they will retire – if they have a retirement plan in place. For the over 60s group, the main challenge instead lies in developing retirement plans for the approximately half of employees who do not have one, in order to reduce risks for both employees and employers alike.

Businesses need different strategies to manage retirement risk

Taken together, these findings show that retirement is becoming a more prominent and more variable risk for Australian businesses. Exposure is concentrated in industries with older, or physically demanding workforces and the growing influence of financial motives means that retirement timing is more sensitive to superannuation balances, asset prices and cost of living pressures than it was previously. Gender adds another dimension with women’s retirement more often shaped by relational and household roles, and men’s by identity and financial considerations.

This means that retention or transition to retirement policies need to reflect the makeup of the business workforce. The increasing use of part-time pathways offers a practical way to enable a diverse group of employees to remain attached to the workforce longer, enabling mentoring, skills and knowledge transfer to younger employees.

As employee retirement intentions are not a reliable guide to retirement timing for people under 60, workforce planning should assume some exits will occur earlier than expected, particularly among higher-risk groups. Early conversations with employees approaching retirement age, including those who have not indicated retirement plans, combined with clear and supportive options for phased or part-time retirement, can provide greater certainty for workforce planning.

Businesses that develop differentiated strategies for different workforce groups will be better placed to retain critical skills and business knowledge, manage clustered departures, and support employees through a transition that is increasingly shaped by individual circumstances, financial considerations and phased departure rather than a single, fixed date.