The best retirement investment might be yourself.
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Who ever said retirement was about taking things easy? About swapping
the daily drudge for everyday enjoyment? The truth for many of today’s
pensioners couldn’t be more different. At just over £90 a week, the
basic State Pension doesn’t go far and the average retirement fund
simply isn’t enough. |
In spite of meticulous retirement planning,
increasing numbers of pensioners are finding their golden days beset by
the ominous dark clouds of financial hardship.
OK, so the forecast may not be too promising, but every cloud has a silver lining and ours comes in the form of a wealth of inspirational retirement income opportunity tips and ideas to help you weather the storm. If you’re 55 or over and looking to boost your pension, here’s where you should start.
Join the cash generating generation.
Most of today’s pensioners were born into post-world war economic chaos and it shows. The enterprising spirit that characterises that age is currently being reborn in a generation of mature entrepreneurs. In fact, for some, what began as a way to earn a little extra retirement money has become a very big deal indeed. 
Today’s over 50s are fit, skilled and, according to research, very likely to lead an active life for at least 25 years after their 50th birthday. Whether you‘re doing it out of necessity or out of desire, working into retirement can be a very rewarding experience. Better yet, if you’re over State Pension age your pension won’t be affected and you won’t have to pay National Insurance, just Income Tax.
Work is much less taxing over 65.
However, before we send you careering back into work, we need to consider a few practicalities first.
Essentially, any income you receive in retirement is taxable and that includes your State Pension. You’ll pay Income Tax, at the usual rates, if your taxable income exceeds your tax-free allowance. It’s worth remembering that your tax-free allowance gets a hefty boost once you retire (allowing you to earn up to £9,640 tax-free as opposed £6,475). So you can earn more before having to pay tax. You may also qualify for other allowances such as Married Couple's Allowance and Maintenance Payments Relief that can reduce your tax bill, or in some cases may mean you have nothing to pay at all.
As a rule of thumb, taxable income includes any of the following:
- All pension income (including State Pension)
- Employment/self-employment income if you keep working
- Almost all bank and building society interest (the 'gross' amount, before tax is taken off)
- Dividends (income from shares)
- Income from property after expenses but not the first £4,250 if you rent out a room in your house
- Income from abroad (overseas pensions have a 10 percent deduction so you are only taxed on 90 per cent of the total amount)
- Some benefits, including Carer's Allowance and, in some cases, Incapacity Benefit
Add up your taxable income and subtract your tax-free allowances (£9,490 if you’re aged 64-74 and £9,640 if you’re over 75). If your taxable income is greater than your tax-free allowance you’ll need to contact HMRC.
It may pay to put off claiming your State Pension.
If you are planning to continue working, or want to return to work, then there are incentives to be had. If you put off claiming your State Pension you can:
Get a higher weekly State Pension for life later on (You must put off claiming your retirement pension income for at least 5 weeks to qualify.
Take the amount you deferred as a taxable lump sum with interest on top of your normal State Pension (You must defer your claim for a minimum of 12 consecutive months to obtain a lump sum payment.)
So, if you think you can earn enough to defer claiming your pension it (or enough to enable you to cancel your claim if you’re already claiming it) then it’s certainly worth considering.
Age as an asset.
Older workers - who tend to be hard working, polite and very reliable - are regarded by many employers as real assets. And, with government initiatives like Age Positive (www.agepositive.gov.uk) and specialist employment agencies like Maturity Works (www.maturityworks.co.uk), Third Age Employment Network (www.taen.org.uk) and
Experience Corps (www.experiencecorps.co.uk) growing in popularity amongst employers, the employment prospects for pensioners are becoming very bright indeed.
Working, is a positive, proactive and worthwhile way to boost your retirement pension pot. So, if you’re not yet ready to put on your slippers then put your best retirement investment to work. Yourself.
Retirement Revenue Action Plan
- Contact some Age Positive recruiters and see what work is available.
- Calculate your income, subtract your tax-free allowance and get in touch with HMRC or your local Tax Office if you need to pay tax.
- If you’re of retirement age, consider whether you can defer your State Pension. You can contact The Pension Service for advice.
- Stop working for others and work for yourself. It’s your retirement income, just go for it.