Tax 2025: Long life, more work | KPMG | AU
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Tax 2025: Long life, more work

Long life, more work: but it’s not a bad thing

As we head into a future where a 100-year lifespan is common, Australia must rethink its approach to work and tax to avoid mass generational inequity. KPMG Tax Partners David Linke and Grant Wardell-Johnson explore.


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The mantra of ‘one job for life’ is long over, but as a lifespan of 100 years becomes more common, we must get even more agile about pursuing diverse education, employers and careers.

This potential extra time is not a myth. In a work titled The 100-year Life, Lynda Gratton and Andrew Scott write that a child born in the West today has a 50 percent chance of reaching the age of 105. If you are now 20 years of age, you have a 50 percent chance of living to 100, or if you are 40, you have a 50 percent chance of living to 95. In fact, life expectancy has increased two years for every decade in the last 200 years.

Why does this matter to work and tax? As we explore in our new discussion paper, Tax 2025, there is a clear financial issue here. People are going to want to work longer or save much more throughout their lives to enjoy this longer future. In the absence of taking action now, the burden on the younger members of society will start to become intolerable. That is clear to most Western countries.

Gratton and Scott note that the old three-stage life of Education-Work-Retirement will become a thing of the past. The 100-year life will become multi-stage. People will have multiple careers and intermittent education experiences. They will be younger for longer. ‘Settling down’ will take on a different dimension. There will be greater variety in households and relationships. Indeed, four generations within the same household will not be abnormal.


There will also be a change in the value placed on different skills. Flexibility and agility will be critical. An ability to network and curate ideas from multiple sources will become important. Deriving ideas from others may not necessarily emanate from close, strong relationships – where there is a propensity for people to think alike – but may be grounded in how one embraces weaker ties, which can lead to a substantial network of personal connectivity, needed for the multistage life.

'Age' will not be synonymous with 'stage'. Options within the working environment will become more valuable. Human Resources positioning by business will become age-agnostic. People of all ages will become students, entrepreneurs, small 'gig' economy participants, and employees throughout their multistage life. And they will work well into their 70s and 80s or longer.

This will be a gift for many, but not for all. Those without the agility and flexibility, who crave the certainty of the past and do not have the broader social skills, may find the new world far more difficult than their parents. This is not a small concern, as it could lead to vast generational inequality.

Perceptions of old age – the value of older people, their power and place in society – have changed dramatically over the last 50 years. As a result of the demographic bubble of baby boomers now moving into older age brackets, at least in the West, there has been a stronger assertion of political and economic 'grey' power, and value associated with being old. Our pensions and tax concessions for retirement incomes are significant, and ballooning health expenditure largely benefits the aged. These costs are largely borne by younger generations. This is exacerbated by our structural deficit, which is borrowing from the current generation for the future. Also the younger generations are unlikely to experience the very substantial rise in wealth enjoyed by the baby boomers emanating from the increase in property values.

As a result, there is rising concern for inter-generational equity. This concern is likely to increase as the issue becomes more transparent, the younger generations become more assertive and society becomes more fair-minded.

This will feed into a broader mindset that people will want to work into their 70s and 80s in the future. Work for older people will be a large, and positive, cultural shift.

To find out more about how Australia's tax system could look in future, read our report, Tax 2025.

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