Tom McKay

The weekend AFR reported that Australia's baby boomer generation are finally starting to exit the workforce en masse after many delayed retirement in the wake of the GFC. Macrobusiness suggests this mass retirement will have three main impacts: First, the potential growth rate of the economy will be lower due to the falling worker share. This will mean that it will become more difficult to grow incomes and raise living standards. Second, the Government will come under increasing financial pressure, due to the shrinking tax base. The problem will also be exacerbated by the higher proportion of the population demanding aged health care and/or the state pension. Finally, asset prices are likely to come under increasing pressure due to: 1) a lower proportion of workers (savers) channeling funds into investments; and 2) a higher proportion of retirees drawing down on their savings/assets.


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