Baby boomers evolve into new generation retirement refuseniks

BERNARD SALT
September 8, 2016
The Australian
It had to happen. Somehow, sometime, the baby boomer generation was always going to re­imagine the retirement years, and now we have proof. Previous generations were hard at work with their bodies from an early age and so they used the 60s to step back and to wind down even if it was on a meagre age pension. This prospect wasn’t as frightening for the generation that remembered the Great ­Depression as it is for the baby boomers.
Across the first 16 years of the 21st century the Australian workforce increased by three million jobs to 12 million. About 800,000 net extra jobs were added in the young age group of 15 to 34. A further 800,000 jobs were added across the middle of the working life between the years 35 and 54. The rest, a whopping 1.3 million jobs, have been added in net terms to the 55-plus age group. Net growth in older workers has outpaced net growth in younger workers so far this century.
Part of the explanation is ­cohort growth: a bucketload of baby boomers careening into their late 50s and early 60s mightily ­expands the size of the worker base. Another part of this older worker shift is overall growth in workforce participation rates. Knowledge working baby ­boomers can choose to remain in the workforce beyond 60, whereas their labouring fathers (as ­mothers didn’t “work” back then) tended to scale back work commitments and exit (meaning ­“retire”) by age 65.
The bottom line is this: the spending market is shifting courtesy of an age bubble and the predilection of baby boomers to remain in the workforce. In 2000, the number of Australians aged 40 to 44 with a job was 1.1 million, whereas today it is 1.3 million. The net growth is actually 156,000, or average growth of just under 10,000 a year thus far this century.
Across the same timeframe the number of Australians aged 60 to 64 with a job has increased from 263,000 to 697,000, which represents net growth of 434,000 or 27,000 a year. Strategically, which has been the better space in which to compete?
The business acumen, of course, is in being able to develop consumer and property product that is pitched squarely at this surge in new spending capacity. Not so much family-oriented McMansions as is preferred by 40-somethings as townhouses and apartments suitable for downshifting 60-somethings.
Then there’s the benefit of first-mover advantage in this space. Net growth in the 40-44 year job market since 2000 has been 14 per cent; net growth in the 60-64 job market since 2000 has been 165 per cent. There’s less competition in the stronger 60-something market because it’s a relatively new consumer segment.
There’s another twist to the boom in baby boomer workers. I suspect that many are extending their working life by setting up small businesses or “working on” as a sole trader. Come out of corporate life in the late 50s and set up shop as a contractor, a consultant, a mentor, a coach, a director and continue on at a leisurely pace with selected clients working when and as you like. In fact, I think there’s a boom in boomer entrepreneurs otherwise known as boomerpreneurs.
Figures released by the Australian Bureau of Statistics in June confirm that across the year to June 2015, the number of small or micro businesses employing fewer than five workers jumped 17,100. The previous year’s increase was just 11,800. Bigger small busi­nesses and medium business numbers actually contracted last financial year. Something powerful is driving Australians to create new small businesses. Something equally powerful is keeping baby boomers in the workforce beyond the age of 60.
Between the 2006 and 2011 censuses the number of employers/self-employed aged 60-something jumped by 49,000, whereas the number aged 40-something contracted by 11,000. The shift ­towards older entrepreneurs may be explained in part by ageing boomer farmers who lack gen Y children prepared to take over the family farm. But it also fits with a bigger view of an even greater societal change. Today’s 60-somethings are university ­educated and come with big ­expectations of lifestyle. Settling back into “pension life” isn’t as ­attractive a proposition as is setting up shop as an independent consultant or business owner.
Better still, retire to a lifestyle area such as the Byron Bay hinterland and do something you’ve ­always wanted to do: set up a photography business or a Pilates/yoga studio or, indeed, continue on as an independent consultant from a lifestyle idyll.
The enabling forces behind this older entrepreneur shift are the baby boom bubble pushing ­beyond 60 as well as certain technology and software developments. Running a consulting business from suburbia or from Mullumbimby requires not just mobile coverage but high-speed broadband access as well as user-friendly accounting software such as Xero and universal storage ­capacity in, say, the cloud.
Strong population growth will always underpin some growth in the household formation stage of the life cycle in Australia. But targeted cohort growth of the scale that is tipping educated, aspirational, digitally connected baby boomers into their 60s is a game changer for those focused on ­snaring new business oppor­tunities. The property industry is well-practised in building houses for 40-somethings but this is not where today’s growth markets are focused.
Boomers aged 60-something are reimagining how this decade may be lived and thus far it seems that they imagine a continuation of work and, for some, further work in a self-employed mode. In this world the home ­office becomes important. Digital connectivity becomes important. Technical and logistic support must be accessible.
There is no office because the office is mobile: it is home, it is a cafe, it is the client’s office, it is an airport lounge — almost everything is done online via a smartphone. The image of a 60-something then begins to shift in the 2020s from daggy retiree to gadabout entrepreneur finally free of kids and mortgage.
I can foresee the formation of a new 60s tribe to rival the cultural impact of this decade’s 20-something hipsters. I can foresee loose fashionable clothing, uber-cool meeting and working places, ­eclectic interest groups, convenient travelling companion hook-ups, start-up discussion groups, baby boomer-gen Y mentor-protege relationships, as well as the promulgation of a much-needed entrepreneurial culture.
What’s not to be excited about as the boomer generation shifts into their 60s and changes the way retirement, work and small business are imagined?
Bernard Salt is a KPMG partner and an adjunct professor at Curtin Business School. This column is partially based on his Small Business Big Thinking report commissioned by NBN and released nationally this week.
bsalt@kpmg.com.au