Retirement doesn’t have to mean swapping your work shoes for slippers full-time. Many older Australians are choosing to keep working, whether to stay active, top up their income, or simply enjoy the social perks of a job. But how much can you work before it affects your age, pension, and superannuation? Let’s break it down in a way that won’t make your head spin.
Understanding age pension payments
The Age Pension is the government’s way of helping eligible older Australians maintain a basic standard of living in retirement. Think of it as a safety net, but one with a few rules attached. To qualify, you must:
- Be at least 67 years old
- Meet residency requirements
- Pass an income and assets test
The good news? Just because you’re receiving the Age Pension doesn’t mean you have to stop working altogether. The government allows you to earn a certain amount without losing your pension payments under the Work Bonus Scheme, allowing you to enjoy a little extra income that is not assessed against your eligibility for age pension payments, giving you a bit of extra cash for those weekend getaways or spoiling the grandkids.
The amount waived in the scheme is dependent on your individual circumstances and can be viewed on your myGov account. To learn more about your eligibility for the Age Pension and Work Bonus we recommend visiting a Services Australia Centre.
Working past retirement age in Australia
Whether you want to keep working part-time, casually, or even full-time, you have options. The Australian Government encourages older Australians to stay in the workforce by allowing them to earn income without immediately losing their pension benefits.
Beyond financial benefits, work can also be a great way to stay engaged, keep your mind sharp, and enjoy some regular social interaction. Plus, let’s be honest—sometimes it’s nice to have a reason to get out of the house!
Pension income test and work bonus
Now, let’s talk about the rules. The Age Pension income test determines how much you can earn before your pension is affected. But here’s where the Work Bonus comes in to sweeten the deal:
- The first $300 per fortnight of employment income doesn’t count towards the income test.
- If you don’t use your full Work Bonus, the leftover amount accumulates—so you can earn a bit more down the track without affecting your payments.
- This means you can take on some extra work in a given week without stressing about your pension suddenly disappearing.
It’s a flexible system designed to let you re-enter the workforce or continue working without too much red tape.
Returning to work and Superannuation Rules
Thinking about returning to work after accessing your super? There are a few things to consider:
- If you retired before 65 and declared you wouldn’t work again, going back to work could impact your access to super.
- If you’re over 60 and have reached your preservation age, you can access your super as a lump sum or income stream, even if you choose to keep working.
- A transition to retirement (TTR) pension allows you to access between 4% and 10% of your super balance annually while still earning an income. Meaning reducing your hours, without reducing your income!
The key takeaway? The rules aren’t set in stone, if you want to keep working, there are options to make it work for you financially. Speak with a superannuation specialist to understand which regulations apply to your circumstances to ensure you’re not left in a squeeze at the end of the month!
Suspending your age pension
Earning too much? If your income exceeds the pension cut-off, your Age Pension might pause, but that doesn’t necessarily mean it’s gone for good:
- If your income stays above the limit for 12 fortnights, your pension will be suspended (not cancelled) for up to two years.
- During this time, you won’t have to report income but can still keep your Pensioner Concession Card.
- If your income later drops below the limit, your pension can be reinstated without needing to reapply.
This means you can give work a go without committing long-term, if it’s not for you, you can step back and return to full pension benefits later.
Financial considerations for working retirees
While working after retirement can boost your income, there are a few financial points to keep in mind:
- You can continue making super contributions until age 75, which could help stretch your retirement savings.
- Extra earnings might reduce your Age Pension payments, so be mindful of how much you’re earning.
- Earning income while accessing super could affect how much tax you pay, once you have reached your preservation age (this varies based on your birth year) you can receive super while continuing to work.
If all of this sounds a bit overwhelming, a chat with a financial adviser can help you navigate the best options for your situation.
Pros and cons of working after retirement
Pros:
- Extra income for holidays, hobbies, or just life’s little luxuries
- Helps your super last longer
- Keeps you active, engaged, and socially connected
Cons:
- Might reduce your Age Pension payments
- Could impact tax obligations
- Less free time for travel, relaxation, and grandparent duties
Ultimately, the decision is about what suits your lifestyle best, some retirees love working, while others are happy to step back and enjoy their freedom.
Planning for your retirement
If you’re considering working after retirement, planning can save you stress:
- Speak to a financial adviser to understand how your pension and super might be affected.
- Consider how different employment arrangements (one employer vs. self-employment) could impact your benefits.
- Be mindful of tax obligations and Centrelink’s income test.
Working after retirement can be a great way to stay active, earn extra income, and keep life interesting, but it’s important to know the rules. With the right planning, you can find the perfect balance between work, financial security, and enjoying your well-earned retirement. Whether you choose to work a little or a lot, the key is making it work for you!