Part-time work in retirement

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Part-time work in retirement

Retirement is a goal we all look forward to, but many of us like the idea of continuing to work part-time in retirement as a way of keeping stimulated and socially connected, as well as supplementing income. If you choose to do this, however, it is important to be aware that it may impact on your age pension entitlements.

Be aware of the limits

Fortunately, the government does allow some level of income to be earned without impact on the Centrelink or the Department of Veterans’ Affairs pension. A single person is permitted to earn up to $162 a fortnight, while couples can earn $288 a fortnight.

Once income exceeds these amounts there is a sliding scale of reduction in the pension. Every dollar earned in excess of the threshold will result in a reduction of fifty cents off the pension for singles and twenty five cents for couples.

Extra benefits from the Work Bonus

As an added incentive, the government has also implemented the Work Bonus Scheme to benefit those who are earning income as employees, (the scheme is not available to self-employed). The scheme allows you to earn an extra $250 per fortnight, over and above the earning limits described above, without it being assessed under the the pension income test. That equates to a substantial total of $6,500 per year.

An important feature of the Work Bonus Scheme is the way it caters for those who may only be working occasionally. The scheme allows you to accrue the $250 per fortnight limit during the times you are not working and then lets you apply the accrued allowance during periods when you are working.

Hypothetically, you could have no employment for the first nine months of the year and then work part-time for the final three months of the year and still gain full benefit from the scheme by being allowed to apply the full annual limit of $6,500 all within those last three months.

Remember, Centrelink and the Department of Veterans’ Affairs will also look at the value of your assets when calculating how much pension you receive.

Planning retirement income

If you want to know more, talk to your adviser, who can help you coordinate your income mix to ensure you maximise your entitlements.

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