Is working part of your retirement plan?
A recent study analysing the income statistics for pensioners has found that more people aged over 65 are continuing to work after they officially retire.
Figures suggest that the amount of pensioners doing so is around 13%, an increase from just 8% over the past ten years. That figure might sound small, but it equates to 1.1 million people boosting their monthly income during retirement. The median amount earned per week is £296, which adds up to £15,400 per year.
Choosing to remain in employment can be down to a need for extra income, but staying employed has also been shown to provide many physical and mental benefits, as well as helping to keep up social activity and giving a sense of purpose, which some feel they lose after giving up work.
For some, the decision to remain in employment of some kind is simply down to a love of working. If you’ve had a long and fulfilling career doing something you enjoy, retirement can come as a shock to the system. Continuing in some capacity by reducing your hours or passing on responsibilities can alleviate this feeling, allowing you to ease into a new way of life at a pace you are happy with. There may also be the chance to try something new that wasn’t possible before reaching retirement age. Carrying on working in a different role or a new industry altogether can give the opportunity to pursue an interest you’ve harboured throughout your working life with the added bonus of being paid to do so.
If you are nearing retirement or are already retired and you’re thinking of continuing work in some way, it’s worth knowing how it can affect your pension, depending on how you go about it. All state pensions and most private pensions can be deferred, the benefit of this being that your pension will be able to continue growing which, in turn, will give you more money to enjoy when you do stop working completely.
You can also choose to begin drawing your pension whilst continuing to work, but anything you draw will count as income, so any income from both earnings and your pension over your personal allowance will be taxed. You won’t make National Insurance contributions once you’re over state pension age, however, which puts a little more money back into your pocket.