... on an individual's retirement savings and, in turn, eventual retirement lifestyle.

The cover of a special 30-page report by The Economist magazine's intelligence unit features the hands of an obviously older person typing on a computer keyboard.

This image neatly reflects the report's key theme: people remaining in the modern workplace past what have been traditional retirement ages.

The Economist's report - IS 75 THE NEW 65? Rising to the challenge of an ageing workforce, commissioned by human and financial consultancy Towers Watson - examines the implications for employers and employees of an ageing workforce.

Although the report focuses on Europe, most of the issues are similar to those facing Australia. These include an ageing population, greater longevity, generally inadequate retirement savings and the need to provide an appropriate working environment for older workers.

As Smart Investing has discussed in the past, a decision to work beyond traditional retirement ages can have a significant influence on an individual's retirement savings and, in turn, eventual retirement lifestyle.

Older individuals who choose, if possible, to prolong their time in the workforce have the opportunity to save longer for what will be a shorter and, therefore, a more affordable retirement.
Of course, many people are not in the position to work until older ages given such factors as the state of their health, their type of work and the availability of appropriate work. Much depends on their circumstances.

"Retirement as we think of it today could soon become a thing of the past," write The Economist's researchers. "State pensions and health provision will come under intense stress. Companies will have to undergo a step-change in their attitudes to older employees and, more broadly, to working practices." Sounds familiar?

A survey of 480 senior executives for the report found that:

• Almost three-quarters of respondents expect the proportion of their employees aged over 60 to increase by 2020 - with 22 per cent expecting a significant rise.
• Forty five per cent of respondents name achieving a work-life balance as the issue that their employees will regard as the most important by 2020. And 33 per cent believe that their employees will regard employment flexibility - including part-time working and phased-in retirement - as the most important issue by that date.
• More than half of respondents say their companies will offer older employees more flexible working hours and/or the ability to work from home.

The respondents say that the three biggest challenges facing retirement savings in the country where they are based are the ageing of the population (26 per cent), impact of government austerity measures (18 per cent) and insufficient retirement savings by individuals (14 per cent).

An individual's decision whether to work past popular retirement ages is very much a personal finance issue - in addition to the many other personal, health and professional considerations.

By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
10th July 2014