A Guide to Part Time Working in Retirement

Looking back just a few decades, by the time most of us reached the state-designated retirement age, we were more than ready to put our feet up and relax with a cup of tea.

Today, however, we’re more active, healthy and raring to go than ever before, and we’re not quite ready to hang up our work clothes just yet. The Advisory, Conciliation and Arbitration Service reports that there are now more than one million workers in the UK aged 65 or over – will you be one of them?

working in retirement

Is it Legal?

Absolutely! Just because you’re drawing a pension, either a private pension or a state pension, doesn’t mean you can’t work if you want to.

Working part time during retirement is completely above board, although there are laws that both you and your employer will need to adhere to. For retirees, any payments received through the supply of products or offering of services need to be logged with HM Revenue & Customs, even if you’re earning below the tax threshold. The exception is if you’re completing casual work such as online surveys, as payments from these count as ‘rewards’ rather than payment for services.

On the employer side, companies have an obligation to pay all workers, including retired part time workers, in accordance with the minimum wage guidelines – currently £6.31 per hour for anyone aged 21 or over.

What Sort of Work Can I Do?

working in retirement

There are more opportunities for part time workers in retirement than you may think, ranging from more casual work right through to formal contracts. Anything from delivering leaflets and cleaning homes through to administrative duties and accountancy.

The Office of National Statistics reports that nearly one third of retirees are self employed, which provides a good combination of the freedom that comes with retirement and a steady income. Opting to go self employed opens up unlimited opportunities. Some cake and sell cakes at local farmers’ markets, some sell paintings, some knit or crochet clothing and toys, some blog from home… if you’ve got a skill, then someone, somewhere, is willing to pay for it!

Why Would Anyone Hire Me?

The question is – why wouldn’t they? There are many benefits for employers when hiring older workers, and the Department for Work and Pensions reports that employment of those aged 65 and over has almost doubled since 2001.

With no dependents, older workers can offer more flexible working hours, taking on tasks that those with childcare commitments are sometimes unable to, and older workers also have much more working knowledge than those coming straight out of school. Providing you’re reliable and professional, and your skills match the job in question, there is no reason why age should have any influence over an employer’s decision.

Will I Need to Pay Tax?

working in retirement

This depends upon how much pension you’re drawing, and how much income you’re generating through your part time work.

All pensions, whether private or state, are taxable, as are any payments relating to part time work. You’ll need to add up these incomes, along with anything else you receive that is taxable, such as rent payments from properties, or some benefits such as Carer’s Allowance.

The annual tax-free income ranges from £9440 to £10,660 depending on when you were born. If your taxable income totals more than this amount, you will need to pay tax. On the plus side, you won’t need to make National Insurance contributions!

Are There Financial Implications?

Part time work during retirement is an excellent way to either delay your drawing of a pension fund, or bring in a little extra pocket money for luxuries. Overall, if you have the ability and inclination to work after you retire, then financially it makes sense.

However, there may be some minor financial implications if you have previously been receiving benefits related to living in a low income household. If you begin earning, you may no longer be eligible for benefits such as pension credit, council tax reductions, or housing benefit. It’s worth weighing up the pros and cons of losing out on this sort of financial assistance before taking on any work in retirement so ensure you’re doing what’s best for you.

This post has been written by Acorn Stairlifts, the first stairlift company in the world to be awarded the Ease of Use accolade by the Arthritis Foundation.


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