Work and Retirement – Do they mix?

By Mark Teale – Retirement Strategies and Solutions Specialist

The terms “work” and “retirement” at first appear to be at extreme ends of the spectrum, but for a portion of the population this is certainly not the case. 

The need for some retirees to work to supplement an age pension is now a necessity. The extra income not only helps with normal weekly expenses but allows a person to fund their travel, eat out or play golf on a more regular basis, if so inclined. Working, whether for payment or volunteering, may help some to feel they are still contributing to society; it allows them to broaden their social circle and can provide purpose and self-respect.

For some, retiring can mean going from an active to a much more sedentary existence. And if the only excitement for the day is walking to the shop for the paper and a coffee, this lifestyle will lose its attraction very quickly. I should make the point that the work a person may undertake in retirement does not need to be a continuation of their previous working career.

As you would not be looking to start a new career, but rather looking for ways to contribute, stimulate your senses and pick up some extra cash, menial or what appear to be menial jobs, should not be looked at as below a person’s abilities. These jobs could include shelf packing, sign operators, headstone restorer, barista, or even becoming an Uber driver. For the person in receipt of an age pension there is an extra incentive to find work – the Work Bonus.

What is the work bonus?

The “Work Bonus” allows a pensioner to earn $300 over a 14-day period without any impact on their age pension. It also allows them to build a bank of $7,800 in credit over a 12-month period if they have not been working – $300 multiplied by 26 fortnights.

So, what does this all mean?

For example, an Age Pensioner working for 4 weeks as Santa at the local shopping mall is paid $4,000 for that period. As they have accumulated a work bonus bank for the year of $7,800, the $4,000 will have no effect on their age pension. (I should point out that I have no idea of Santa’s hourly rate!) For a pensioner who is working on a part-time basis throughout the year, the calculation is different. If, for example, the pensioner was earning $600 every fortnight, the first $300 of income is exempt and the remaining $300 would reduce their age pension by $150 per fortnight – leaving the pensioner $450 per fortnight better off.

An age pension couple can access $300 per fortnight work bonus each, meaning they could earn an extra $15,600 per annum without it affecting their age pension. The good news is that since the 1 July 2019 the work bonus is now also available for those age pensioners who are self-employed.

If you are still unsure as to how the Work Bonus operates or if you may qualify, talk to an expert who can help you decipher the complexities of the legislation. Note that the examples provided do not consider a person’s tax position or any other investment income they may have.