Nicholas Toth works on a breast plate for a diving helmet at his workshop next to the Anticlote River in Tarpon Springs, Florida, April 6, 2014. Toth is among the last to carry on the century-old family skill of hand crafting helmets for sponge divers. He
Nicholas Toth works on a breast plate for a diving helmet at his workshop next to the Anticlote River in Tarpon Springs, Florida, April 6, 2014. Toth is among the last to carry on the century-old family skill of hand crafting helmets for sponge divers. He uses only his hands, cast-iron mandrels, wood patterns, lathes and other machinery inherited from his grandfather. Picture taken April 6, 2014. REUTERS/Steve Nesius (UNITED STATES - Tags: SOCIETY)
Nicholas Toth works on a breast plate for a diving helmet at his workshop next to the Anticlote River in Tarpon Springs, Florida, April 6, 2014. Toth is among the last to carry on the century-old family skill of hand crafting helmets for sponge divers. He uses only his hands, cast-iron mandrels, wood patterns, lathes and other machinery inherited from his grandfather. Picture taken April 6, 2014. REUTERS/Steve Nesius (UNITED STATES - Tags: SOCIETY)

Reserve Bank of Australia (RBA) Assistant Governor for Economic Forecasts Christopher Kent has supported a federal government initiative to further increase the retirement age in the country that would make the proposed retirement age the highest in the world.

Kent said that Australia needs to look forward into the future and make adjustments, including work longer up to 70. The current retirement age is 65, but under the plan, Aussies born in 1966 would need to work until 70 to draw their retirement allowance.

The plan to delay retirement is because of the sheer number of pensioners at 2.4 million, who draw $35 billion annually from the retirement fund, which makes pension the biggest government spending programme. Pensions are the main source of income of 65 per cent of retired Aussies. As more baby boomers enter retirement, spending on retirement was forecast by an independent review, commissioned by Prime Minister Tony Abbott, to increase at an annual rate of 6.2 per cent

Besides Australia, retirement ages are also rising in many western nations with the UK and Germany planning to increase it to 67 from the current 65, which is the average pension age for males in 34 Organisation for Economic Co-operation and Develoment nations. Among females, the average pension age is slightly lower at 63.5.

Kent suggested, quoted by Bloomberg, "They could use those years to pursue a safer option to generate a living, or even take on a different risky venture." He added, "In short, '40 may be the new 30' when it comes to comparing the willingness of the current generation to take on risk compared with those born only a few decades ago."

A study by consulting firm Mercer found that most Australians retire at the wrong age due to underestimation of their life expectancy and the amount of the retirement fund they need for their twilight years.

For those who retired at 60, they need to fund an average of 25 more years, but among white-collar workers, the average goes up to 35 years, said David Anderson, managing director and Pacific market leader of Mercer.

However, while some Aussies want to work longer, 40 per cent of them are forced to retire due to redundancy or sickness, causing a gap in the amount of retirement funds they need for their remaining years. About half expect to cover that gap with their family home.

Anderson said, quoted by the Herald Sun, "Most people would rather not sell their family home they would rather to afford to live in it, but some downsize to supplement their lifestyle and this is all due to insufficient retirement savings."

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