It should be no surprise that the baby boomer generation is divided in its attitudes to retiring. After all the people born in the baby boom that followed the end of World War II have challenged and redefined just about every other social attitude as they have encountered it. Why should retirement be any different.

A discussion paper released recently by social policy research group, The Australia Institute, highlights interesting shifts in attitudes to retirement among the boomer generation - and some concerns about how people receiving the age pension will be regarded in future.

The report - based on a series of focus groups and a national survey - highlights the "sharp divide" that has opened up between high income and low income baby boomers and how that is shaping attitudes.

The difference is probably best illustrated by the general attitude towards retirement - higher income baby boomers according to the report are rejecting the traditional idea of retirement and instead are embracing the "seachange" approach that sees them continuing to work or pursue other interests.

Low income boomers are in a very different position and because of their lack of retirement savings have the more traditional view of retirement that provides a "distinct and welcome transition from work to leisure".
So the point the report's authors are making is that high income people expect to work beyond retirement age because they want to while lower income people expect to work beyond retirement age because they have to.

The research also challenges one of the key underpinnings of our superannuation system - the age pension. Policymakers and architects of our super system will be encouraged by the results which show that increasingly baby boomers regard the pension as a safety net - precisely the role the policymakers believe it should fill.

Our superannuation guarantee system gets a tick from the baby boomers - although they regard themselves as the "unlucky generation" because compulsory super was not there for most of their working life.

But the shift in attitude around the age pension could be very significant according to the report. Financial planners will tell you that accessing part of the pension or at least qualifying for the medical card is often a strong focus among even high income retirees. While there remains a strong sense of the age pension being a universal right what the research is suggesting is that attitudes could change dramatically as the baby boomers retire and the pension may lose its social legitimacy and come to be regarded more like unemployment benefits - a last resort - rather than a universal right.

The report then argues that this may erode public support for the age pension and "remove the political obstacles to a government determined to reduce it".

At retirement planning seminars that question is often put another way - will there be a pension at all when I retire?

The attitude shift is certainly underway and speaking with investors at seminars around the country the notion of the age pension being abolished or severely restricted is regularly raised as a fear - and a spur to save more for retirement.

The counter argument is that because baby boomers have been unlucky by not having compulsory super for all their working life a great number - if not the majority - will be eligible for at least part of an age pension for most of their retirement. Certainly the federal government's Treasury modelling forecasts that.

So while the attitude towards the age pension will continue to shift and be accepting of the safety net concept it would be a very brave politician that wanted to take the safety net any lower.

Pensioners, after all, still get a vote.

Smart Investing
By Robin Bowerman
8 September 2006
Principal & Head of Retail, Vanguard Investments Australia
www.vanguard.com.au