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Maximise Your Earnings Past 65

By: Kevin Dowling BA (IMC) - Updated: 12 Apr 2013 | comments*Discuss
65 Pension Income Retirement Part-time

Many people look forward to retirement and are determined to leave the working week behind. For many people, however, reaching retirement age is not a relaxing time. Most people do not feel ready to give up work. It is not uncommon for people to feel isolated without a regular job to go to, or feeling that they have little to offer society now that they are no longer part of the workforce.

Furthermore, many people are choosing to work longer for financial reasons, either because of an inadequate pension, no savings or simply to help fund the lifestyle they want to live.

The Physical Benefits of Staying in Work

Continuing to work on a part-time basis is a good way to bridge the gap between your working life and your retirement years, allowing you to continue to maintain a routine, physical exercise and mental stimulation. You may also wish to consider working after State Pension age if you are worried that you have not yet saved enough to support yourself as a pensioner.

There are several advantages to working part-time beyond retirement age. First, employment keeps you active and will allow you to generate a regular income. It is worth remembering that choosing to continue working does not mean that you have to continue in the same role or career that you undertook during your working year before retirement.

More companies are keen to employ people who have reached retirement age, because they are able to work shorter working hours, are hardworking and trustworthy and have a wealth of experience to teach other people.

The Financial Benefits of Working

Continuing to work should help you to keep building up your pension pot, and therefore enable you to save more for the retirement years ahead. Remember that workers over the age of 65 no longer have to pay National Insurance contributions on their wages, so you should see a significant improvement in your wage packet.

Bear in mind though that if the sum total of all your sources of taxable income is over your personal allowance for the year, you will be required to pay income tax at the appropriate rate.

Your personal allowance is the amount of income you are entitled to receive each year before you must pay income tax. If you are over sixty-five you have a more generous personal allowance of up to £21,800, but you also have an income limit.

Will Your Pension be Affected?

If you are considering working after retirement age, consult the terms and conditions of your occupational pension scheme in order to find out how it could affect your pension benefits. The attitude towards deferring your pension can vary quite markedly from one provider to the next. Some will expect you to pay penalty charges if you decide to defer.

Other schemes, however, will allow you to defer your pension (providing you inform them of your intention to do so) and could even offer you extra benefits for delaying your pension.

Your scheme may also offer you the chance to draw some or all of your benefits whilst continuing to work, or even allow you to continue to make contributions to your pension fund whilst drawing a pension.

It is therefore worth arranging a meeting with your pension scheme adviser in order to discuss the options available to you.

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