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Working after retirement age: What is semi-retirement?

More and more people are thinking of ways to either extend their working life or earn extra money once they have retired. Semi-retirement is increasingly seen as an option for many of us who aren’t ready to fully retire for whatever reason.
Things to consider when thinking about semi-retirement:
  • It’s a chance to carry on working after retirement age and keep earning – although this may be less than previously
  • It may give you more free time to enjoy the things you want to do
  • It will give you the opportunity to enjoy some of the positive aspects of continuing to work, such as the social interaction
  • However, it means taking a decision about when to take your pension benefits – there may be tax implications if you work while drawing a pension
  • When will you decide to fully retire?

Semi-retirement – your options

Nowadays, unless there are clear reasons why you can’t carry on, you can’t normally be asked to leave work just because you’re 65. As a result, more and more people are working after retirement age. But there is another way. You don’t necessarily have to continue with the 9 to 5 past 65 - you could think about semi-retirement instead.

A chance to work past retirement age, without the 9-5.Semi-retirement can cover a range of ways of working, but at its heart, it means reducing the hours you work in later life. It could be as simple as working part-time, remaining with your employer in a consultancy role, or perhaps working for six months out of the year, taking the rest of the year off.

Instead of the traditional ‘big bang’ approach of working one day and being retired the next, many Brits are choosing to keep the job they have but reduce their hours, or find new work that they enjoy and helps them cover the bills.
In fact, figures from the Office of National Statistics show that 300,000 men and women aged 70 and over are still working to some extent.

The benefits

There are many positive aspects to semi-retirement. For one, it will give you more free time to do the things you like whilst continuing to enjoy the benefits of employment - such as a wage (albeit likely reduced), the social interaction of having colleagues and the enjoyment and sense of purpose that comes with having a job.
Semi-retirement offers other positives. Without the pressure to climb the career ladder and get that next promotion, you can simply enjoy your job while also having the time to enjoy things outside of it. Many semi-retirees act as mentors, imparting their hard-won knowledge to the next generation of workers.
You might decide to turn your skills or interests into your own business in retirement and self-employment can be a great way to stay busy while earning extra cash.

The drawbacks

There are also downsides to consider when thinking about semi-retirement, the main one being living on a reduced salary. Can you afford to live on a part-time wage? How much will you need to cover the bills? Try making a list of all your outgoings and see how much you will need to live on. Read about retiresavvy blogger Julia Skinner’s thoughts on budgeting in retirement.
There’s another important thing to consider: when you will start taking pension benefits, such as the State Pension? If you continue to work past State Pension Age you can choose to either start taking it then or put it off until later. Deferring taking your State Pension can have financial advantages – the government will increase it by 1% for every five weeks you delay, or 10.4% a year.
Should you continue to do paid work while also drawing a pension, there will be tax implications. For more information about tax when working in retirement, see the government’s own website.
Working after retirement age can give you the best of both worlds, but you have to make sure it’s right for you. If you do decide to ease into retirement it may be worth talking to a financial adviser first.
Are you thinking about semi-retirement? What are your concerns? What are the main pros and cons for you? Let us know, we’d love to hear from you.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.


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