Can't afford to retire yet?
This can be frustrating, however there are plenty of things you can do to boost your retirement income.
How can you boost your income in retirement?
CARRY ON WORKING AND ACCESS YOUR PENSION POT LATER
Although you may be able to take your pension from age 55 (changing to age 57 on the 6th April 2028), the longer you leave it invested, the longer it has the potential to grow until you decide to take money from it. Use your pension later.
You can also continue to contribute to your pension, which may increase its value.
Use our pension and retirement calculators to find out what your pension could be worth.
You can claim your State Pension once you reach your State Pension age. However you don't have to. Your State pension will increase every week you defer, as long as you defer for at least nine weeks. Not everyone is entitled to the full State Pension. You should check what you're entitled to before making any decisions about your retirement.
USE YOUR PROPERTY
If you own a property you’re in a great position as you could:
- rent out a spare room
- sell and downsize to a smaller property
- move to a different area.
If you rent, you may be able to reduce your rental amount by moving elsewhere.
WORKING IN RETIREMENT
There's no longer any fixed retirement age in the UK. This means you can usually chose to continue working as long as you'd like, even if you've accessed your pension.
There are some jobs which have an age limit, for example the fire service. If you need to retire from your job due to an age limit you can still chose to work in another occupation that doesn't have a limit.
So what are your options? Let’s take a look
OPTION 1: CONTINUE TO WORK AND DEFER TAKING YOUR PENSION
You could leave your pension invested until you’re ready to take an income from it. You can defer taking your state pension too. It's also possible to continue to contribute to your pension at this time, which may also increase its worth.
Use our pension and retirement calculators to find out what your pension could be worth.
OPTION 2: TAKE MONEY FROM YOUR PENSION AND CARRY ON WORKING
This can be a good way to top up your monthly income. However, while you can normally take up to 25% of your pension as tax-free cash, you would have to pay income tax on the rest.
As an example, let’s look at how much your weekly income could be if you were to keep working but also took the State Pension and an income (annuity) from your pension (assuming a personal allowance* of £12,570, you’ve reached your State Retirement Age and you are entitled to the full State Pension):
*The personal allowance is the amount of income you can receive in a tax year before you start paying income tax.
| SOURCES OF INCOME | WEEKLY FIGURES | |
|---|---|---|
State pension |
£221.20 | |
| Annuity payments | + | £100 |
| Income from work | + | £250 |
| Total income before tax | = | £571.20 |
| Tax | − | £65.89 |
| Your total net weekly income would be: | = | £505.31 |
This example is for a non-Scottish resident.
Tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.