You may think there are numerous benefits to being retired, and you’d be right.
You don’t have to commute, saving you money on petrol or expensive season tickets. You no longer need to dress smartly, stick to a routine, tolerate the inevitable office banter or suffer a cellophane-wrapped lunch.
Perhaps, more importantly, you are free from certain payment requirements, and entitled to a number of retirement benefits.
Although your pension and other types of income are subject to tax you are no longer obliged to make National Insurance contributions.
Retirement may come early if you are fortunate, but sooner or later you will reach State Pension age and be entitled to draw your pension. How much you get will depend on how much you have paid in National Insurance contributions over the course of your working life.
From the time the latest flat-rate pension was introduced back in 2016, you will need at least 10 qualifying years of contributions to get any of the new state pension, and 35 years of contributions to receive the full amount.
What is Pension Credit?
Not everyone will collate enough National Insurance contributions to guarantee they are entitled to the full State Pension. If this is the case, you could be entitled to Pension Credit, which comes in two parts: Guaranteed Credit and Savings Credit.
With Guarantee Credit your weekly income will be topped up if it’s below £167.25 for single people, or £255.25 for couples.
To make matters even better, you don’t pay tax on Pension Credit, although you must live in Great Britain and have reached the qualifying age, which is gradually rising in line with the state pension age.
What is Savings Credit?
Pension Credit is one thing; Savings Credit is another. This is available if you or your partner are aged 65 or over. To qualify for this small additional payment of £13.07 a week for single people or £14.75 for married couples or civil partners, the applicant must provide proof of their State Pension and other pension contributions, most benefits, savings and investments and earnings.
For all the stringent requirements, you don’t need to be married or in a civil partnership to qualify for Savings Credit.
However, if you reached State Pension Age on or after April 6, 2016 you will not be eligible for Savings Credit - unless you have a partner who did reach State Pension Age before April 6, 2016.
What extra retirement benefits might I get if I am disabled?
You may be entitled to a larger Pension Credit pay-out if you are registered disabled, or a carer.
You can only qualify for the extra benefit if you get Attendance Allowance or the middle or highest rate the Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment; if you live alone (unless your partner also receives one of the qualifying benefits); and if no one gets a Carer's Allowance for looking after you.
As with anyone else who is eligible to claim Pension Credit, you can do so by contacting Citizens Advice. You will need your National Insurance number and financial details, including bank account information.
Winter Fuel Payments
The government provides an annual Winter Fuel Payment of between £100 and £300 to anyone of the qualifying age – which is currently anyone born before 5 April 1954.
The payments are not available to anyone in prison, hospital, or who has been living in a care home for over 12 weeks and also receives Pension Credit.
If you are entitled to receive a Winter Fuel Payment, the chances are you’ll get it automatically, as it will be triggered if you are eligible and get a State Pension, Pension Credit or certain other state benefits. However, if you don't receive your benefit automatically, you need to claim it on the government's page here: How to claim Winter Fuel Payment.
In addition to the Winter Fuel Payment, people receiving a State Pension or Pension Credit, or perhaps if they are getting disability or bereavement benefits, may be entitled to a Christmas bonus of £10. This is paid automatically.
Council tax reduction
You could be entitled to a Council Tax Reduction if you live in England, Scotland or Wales. There is a different scheme for people living in Northern Ireland.
You can apply for help if you own or rent your home, are working or not or live alone. But whether you’ll be successful depends on your local council, your personal circumstances, income, and family circumstances. For instance, you may get support if you have children or dependent adults living with you.
If you are aged 65 plus you could be entitled to receive Attendance Allowance of £58.70 (lower rate) or £87.65 (higher rate) a week to help with your personal care.
The rate you receive will depend on your physical or mental health.
If you have a carer, they too could be entitled to financial support.