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A working retirement – choosing to return to work

You might be enjoying retirement and returning to work wasn't the plan. However, circumstances change, and retirees are going back to work. Here are some tips to consider.

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  • Finance
  • Read Time: 5 mins

Key points

  • Low superannuation and increased cost of living pressures are some of the reasons retirees are going back to work.
  • Changes to pension income test rules mean there is no better time than now to go back to work.
  • Tips for going back to work.

Declining superannuation returns combined with rising inflation and cost of living pressures mean more retirees could soon be returning to work.

National Seniors research found 16 per cent of age pensioners re-entered the workforce after initially retiring, while another 20 per cent said they would consider returning to work.

Changes to the Work Bonus limit mean you will be able to keep more of your pension over the next year if you do.

If you want to go back to work, there is no better time.

Here are some things to consider when job-searching.  

Deciding whether to go back to work

Consider how much you would like to work, whether that is on a full-time, part-time, or casual basis.

If you already have a routine you wish to maintain outside of retirement, you should factor in the regular appointments or activities you need to keep and what hours best suit you.

The intensity and demand of a job are also important.

You may want a job that is a little easier or less strenuous. Ask yourself if you have any health and physical limitations that could restrict you.

Additionally, many jobs require a lot of use of technology. Are you computer literate? Or do you lack confidence in handling the technological elements of a job? Perhaps, computer training or re-training in your new field is required.  

Old job or new?

Returning to a job or industry you were previously employed in can be a familiar comfort, and you can also provide a wealth of industry experience.

But you can also consider going into a job or field that is new to you, which can be an exciting opportunity to discover new skills.  

Weighing up the costs

There can be hidden costs when returning to work, such as pension and taxation implications, clothing, and transportation expenses.

It is important to calculate these additional costs, including petrol and vehicle maintenance, or public transport.

Additionally, if you care for another person or an animal, you may need to hire a carer or pet sitter while you are away from home.

Accessing your superannuation fund

When you attempt to access your super once you leave work, your fund will ask you to sign a declaration to indicate you are no longer working and intend to retire permanently to access your superannuation.

But that does not mean you are not allowed to return to work if your circumstances change.

You can continue to receive your super pension after you return to work, and from 65, you can access your super whether you are retired or not.

When going back to work, you can continue to receive an income from an account-based pension - if that is what you choose. But you will need to open a new accumulation fund account, so you receive your employer’s compulsory 10 per cent super contribution, plus any extra contributions you wish to make.    

Accessing the Age Pension

It is important to be aware of what going back to work will mean for any Centrelink benefits you or your partner may receive, such as the Age Pension.

You are required to let Centrelink know you are receiving additional income within 14 days of going back to work.

Going back to work means you will be bringing in more income, which could lead to accumulating more assets like property or a caravan and result in your Age Pension being impacted.

These assets and the additional income will be income tested by Centrelink to see if you qualify for the full or part Age Pension payment, as there are limits on how much you can earn.  

The Work Bonus incentive

The government has a Work Bonus scheme designed to encourage people to stay in the workforce after reaching the age you are permitted to access the Age Pension.

Currently, you need to be 66 years and six months old to access the Age Pension, but as of 1 July 2023, the age will increase to 67. 

A temporary increase to the pension Work Bonus limit by $4,000 was announced during the Jobs and Skills Summit and due to expire 30 June 2023.

After concerted advocacy by National Seniors, Labor has amended the legislation and the trial will now be extended until the end of December 2023 to give more time to get pensioners back to work. 

This practical change means more pensioners can benefit over a longer period.

With the Work Bonus increase, a single pensioner with no savings could earn up to $17,000 without impacting their pension during this time. A couple with no savings could earn as much as $32,000 (if both work part-time up to the limits). This includes the additional exemption of $4,940 (single) and $8,736 (couples) which is applies to income from any source. 

National Seniors applaud Labor’s decsion to extend the timeframe and the work done by the crossbench, including the Greens and Independents, in helping make this happen.

The legislation is expected to pass the Senate later in Novermber and be available from early December.

Anyone working or going back to work during this period will have access to the extra $4,000 limit to reduce the amount of pension you lose.

For further reading: Aged Care Guide and NSA research 

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