Australians are living longer than ever before, and with a life expectancy among the world’s highest, Australians are enjoying retirement for longer than at any point in history. For many, retirement comes at a time of one’s own choosing. However, some Australian workers are forced into early retirement as a result of unforeseen illnesses. For these Australians, early retirement decreases their superannuation balances, their long-term wealth and the quality of their retirement over the long-term.

Early retirement also hurts Australia’s economy more broadly. There is both a cost to Australia’s GDP and to Australia’s superannuation system. This report aims to quantify these challenges and offers actionable policy recommendations that work towards reducing the prevalence of illnesses causing early retirement, improving the financial security of Australia’s retirees and the health of Australia’s economy.

Part One of the report estimates the economic impact of early retirement due to ill health on GDP. Using data from the ABS Survey of Disability, Ageing and Carers 2015 and the Household, Income and Labour Dynamics in Australia (HILDA) survey, the report finds that the economic loss due to early retirement was $45.3 billion in 2017; a figure, which is expected to increase to $53.4 billion by 2025. The associated loss of productive opportunity for Australia justifies additional investment in health programs to improve lifetime health.

Part Two analyses the effect of forced early retirement on superannuation balances using the ABS Household Income and Wealth survey and Australian Prudential Regulation Authority (APRA) data. Had an individual remained in the workforce and continued to build their balance through further contributions and investment returns, they would have a balance of $155,600 by age 65. Instead, those retiring aged 50-54 lose up to $142,100, comprising both foregone additional increases from working longer and early withdrawals.

In Part Three, the report estimates the impact of minimising early retirement on GDP and superannuation balances by reducing rates of health conditions that force early retirement. The report focuses on the top five health conditions that are predictors of early retirement and discusses ways that these conditions can be better addressed.