KERRY O'BRIEN, PRESENTER: The Government's Budget decision to lift Australia's retirement age to 67 by the year 2023 marks the beginning of some profound changes to the nation's retirement policies.

Faced with an ageing population, the Government says the only way the age pension can be adequately funded into the future is if people stay in work longer.

It's a logic that's hard to argue given the basic facts and figures except for one major problem; raising the retirement age will achieve little unless a practical solution is found to a much more immediate problem - rampant ageism in the workplace.

Experts in the field say many workers already battle to find and keep their jobs in the last two decades before retirement age.

Deborah Cornwall reports.

TOBY MARSHALL, RECRUITMENT SPECIALIST: It's a bit like dating, people always want to stay 39, and in jobs it's the same. It starts at 40, it gets worse at 45, and worse at 50.

DEBORAH CORNWALL, REPORTER: In the working world, 40, it seems is the new 50. By the time we do reach the half century mark, there's little chance you'll ever find a new job in your chosen profession.

TOBY MARSHALL: There's a number of reasons. With women it's as basic as they remind younger managers of their mothers. With men it's the belief that they won't learn, that they'll be hard to manage, which is simply untrue. It's ignorance. We're humiliating a whole generation of our most highly skilled and highly professional people.

DEBORAH CORNWALL: The Rudd Government's recent move to lift the retirement age to 67 has been widely sold as inevitable given the demographic time bomb of an ageing population. By 2050 one in four Australians will be 65 or older compared to one in eight now. And the Government says it has to pay for the pension somehow.

JENNY MACKLIN, COMMUNITY SERVICES MINISTER: In 1986 a man going on the pension at the qualifying age of 65 on average would receive the pension for 15 years. By 2010 this will reach around 21 years. But even in 2023 when the qualifying age reaches 67, with improved life expectancy it's expected the time spent on the pension will be 22 years.

DEBORAH CORNWALL: But labour market observers say while most people accept the idea that all of us will have to work longer, the Government has yet to deal with the much immediate challenge of just how that might work when older Australians are already struggling to keep their jobs in the last two decades of their working life.

MIKE RAFFERTY, WORKPLACE RESEARCH CENTRE, SYDNEY UNIVERSITY: You get to 50 or 55 and you lose a job that you've been in for a long time, it's very hard to get back into the work force. And there are a lot of indignities of people trying to go through training, trying to re-skill, maybe picking up little part time jobs. And essentially what this Government's going to say is you're going to be forced through those indignities for at least another two years.

DEBORAH CORNWALL: Painters Mick Pryce and Kevin Hornhardt are still in their 50, but after 30 years the job has left its mark.

MICK PRYCE: In the last six months it's been ongoing. It's been one thing after another; a knee, an arm, a foot, medication. 10 years ago I would have bounced back.

KEVIN HORNHARDT: I don't get out of bed as early as I used to. Well, I do, but I don't get out with the same vigour as I used to.

DEBORAH CORNWALL: Making it to 67 is a daunting prospect

MICK PRYCE: You do think about each job as they come. Can we do this, can we manage this job - because the body is letting you down by increments every year.

But it's not just workers in the trades who are unlikely to make it to the new retirement age. In the recruitment industry highly skilled professionals are largely regarded as all washed up once they hit 50.

JON HORAN: Very often people gave said you don't fit the culture or you don't match the work environment. And they don't say more than that. But the only conclusion you can come to is you'll be the old bugger on the shift.

DEBORAH CORNWALL: At 57, HR executive Jon Horan has applied for more than 200 jobs in the past seven months.

JON HORAN: So I've had two telephone interviews, one face to face interview, and a number of rejection letters, but more often than not, silence has been the response.

DEBORAH CORNWALL: Professional recruiter Toby Marshall says Jon Horan's story is depressingly familiar. Anti-discrimination laws, he says, have only added to the misery of older workers, forcing them to go through a distressing charade of applying for jobs but never making the short list.

TOBY MARSHALL: We've got people who were earning $200,000 a year who are now working in Video Ezy. They've got to feed their families. It is a tragedy. Others try to buy themselves a job, so they'll go in and put all their superannuation, hard earned superannuation into a newsagency, a pub, or some form of franchise. That is a disaster for most of them.

DEBORAH CORNWALL: National Seniors Australia is the country's most powerful lobby group for the over 50s.

MICHAEL O'NEILL, NATIONAL SENIORS AUSTRALIA: National Seniors believes the Budget awakens the nation's conscious to the biggest picture of what lies ahead in coping with the ageing population.

DEBORAH CORNWALL: The group supports a later retirement age but it's also using its considerable clout to press for a better deal for older workers. In a landmark report released last week it points to the fact there are already more than two million Australians over 55 who are willing to work but employers don't want them, and it's costing the country close to $11 billion a year in lost productivity

But ageism isn't the only challenge to our retirement policy. Superannuation took a big hit in the global financial crisis and there's now a growing unease among economists we've all been conned into believing the only way to fund our retirement is by working harder and longer. And if we don't have enough money to scrape up for super at the end of it all, we've only ourselves to blame.

MIKE RAFFERTY: Economic debate in Australia has had this huge moral element so that people that don't retire as self funded are almost considered to be failures who have to be propped up as almost poor people, and this is a terrible way to bring dignity to retirement.

DEBORAH CORNWALL: Despite some recent reforms to tax concessions the super system still overwhelmingly favours the wealthy. Over the next decade the retirement age may ultimately stretch up to 70. But policy commentators say until governments make some hard decisions about superannuation reform, no matter what the retirement age, most people simply won't have enough super to fund their own retirement.

MIKE RAFFERTY: The age pension currently costs about $27-billion a year and we're handing to high income earners tax concessions in the super system, around about $27-billion. So if the Government was serious, you would have seen them attack that.

DEBORAH CORNWALL: Shaping work and retirement policies to serve the future will require some profound attitude changes in our work culture, a challenge not just for governments but the whole community.

TOBY MARSHALL: We really need to start casting some light on this issue, start talking about it and not just ignoring it, and doing things like raising retirement ages without addressing the real problems.

JON HORAN: I want to get into a job and I want to contribute, and I'll do that for another 10 years or longer.

KERRY O'BRIEN: Deborah Cornwall with that report.