The number of people in employment above the state pension age is at a record 1.61 million (11.5%), the latest statistics show, having more than doubled since the turn of the century.
With the default retirement age of 65 having been scrapped in 2011, there’s no longer a set date in your life to stop work – but it can still be a good point to think about your career plans.
Whether you’re thinking of staying in your current role or contemplating gradual retirement, there’s plenty to think about before leaving employment for the final time.
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For some, retirement might be a moment they’ve been looking forward to for years, but a sudden stop could put a strain on finances. Working on past state pension age can give you more options financially, especially if you’re nervous about relying on pension and savings alone.
Continuing to work is often about more than just income. It’s a social experience too and can provide tremendous mental stimulation. Two-thirds of those still working past state pension age do so on a part-time basis, says the Office for National Statistics (ONS), either employed or self-employed.
Reducing your hours can be way to find more balance between working and exploring a hobby, or a desire to try something new.
The Co-op Group, which says more than 10% of its workers are over the age of 60, believes part of the reason the firm appeals to older staff is its flexible approach to working hours.
The company offers part-time opportunities for people wanting to work a shorter week, or to work around other commitments and interests, says Claire Costello, chief people and inclusion officer at Co-op Group. “Our carers policy also supports colleagues to manage work and caring for dependants,” she adds.
Of course, not everybody is able to continue working into their 70s. If this is the case for you and you’re worried about how you’ll manage without employment, make sure you’re aware of all the benefits you may be eligible for.
Things like Pension Credit – which hundreds of thousands of eligible households aren’t claiming – or Attendance Allowance if you need care, can help top up your income after leaving work.
If you want some autonomy over your work pattern, one option is to start your own business or work on a freelance or consultancy basis.
It’s a popular choice for those continuing to work into their 60s: around 37% of workers over the age of 65 are self-employed.
Chris Beesley, 71, a former accountant, now runs an online coaching business with his wife Susan, 69, a former management consultant, advising others on how to top up their retirement income through self-employment.
Chris says the barriers people often face include an overwhelm of information, fear of change and going out of your comfort zone, as well as a lack of plan to follow.
He suggests finding something that you can do or want to do as a first step. He says not to underestimate the value of the skills and experience you’ll have built up in your chosen career over the years.
“Retirement is a continuation of life. It used to be about getting to 65, stopping work and whiling away the time until the day came that you weren't here anymore,” says Chris.
“But people are so much younger in their older years now. There is still so much more that you can do. Having an income can give you more choices – perhaps to travel or volunteer.”
If you’re wondering how to get started, Age UK has a range of guidance for anyone thinking of beginning a business in later life.
Chris also suggests finding a mentor in the area you’re interested in, as well as joining communities of like-minded people, either locally or online, to help share stories of success (and potential pitfalls).
If you’re tempted to use some of your pension to cover the costs of starting a business, consider speaking to a professional financial adviser first, so they can help guide you through the risks to your future retirement income.
Jenny Connor, 66, officially retired aged 60 from her job as a doctor in the NHS – now she’s a farmer. Her initial plan was to go part-time, as a phased transition, but this wasn’t a viable option at the hospital where she worked.
So instead, Jenny, who lives rurally in County Durham, decided to transform the land around her home into a farm that grows fruit and crops. She also produces a range of vegan food and drinks and holds events on the farm.
Jenny already owned the land around her home – after negotiating with the former owner for 19 years – and saw that as an opportunity to try something different.
“I’m not the sort of person that can sit still and do nothing, because my brain is too full of ideas,” she says.
Jenny’s biggest challenge was accepting the knowledge and expertise she had as a doctor would not be used after retirement – although some of the skills are still helpful in her daily life.
She also found the drop in income hard, especially because of the high costs of setting up a farm.
Running a business is new to Jenny, but she says there’s a lot of free information online to help.
Banks and the social media platform LinkedIn run business training webinars, and she says most councils will have some sort of business support advice available.
“Learning to run a business is a huge learning curve. It doesn't seem to have an endpoint as far as I can tell. But there are a lot of free resources online. I even designed my own website,” says Jenny.
“I’m the happiest I have ever been. I’ve found myself, my place in nature [and] I make a tangible difference to the environment and to other people’s wellbeing.
If you plan to carry on working beyond pension age, you may be wondering whether to defer taking the state pension.
Doing so means that in future years you’ll get an uplift of 1% for every nine weeks you defer, says Nick Onslow, Chartered Financial Planner at Progeny Wealth.
He advises caution when considering this option, though. “You postpone taking £11,973 annual income for an approximate gain of £694 a year. As a rough calculation, you would need to live 17 years to get your money back.
“For people suffering from ill health or with a history of family illness, this could be seen as a risk not worth taking.”
The new state pension, for those who qualify to receive the full amount, is £11,973 a year in 2025-26.
This will swallow up most of your £12,570 personal allowance – the amount you can earn before you pay tax. This includes income from employment or self-employment, and money from private pensions. So, if you work and get the full state pension, it’s likely you’ll pay income tax too.
The tax rate is 20% until your earnings hit £50,270. Earnings above this are taxed at 40%, or 45% if your income is above £125,140. The tax thresholds are different in Scotland.
If you remain employed and claim the state pension, you’ll normally pay tax through PAYE – although you’ll no longer need to pay national insurance once you reach state pension age. However, if you run a business or earn money from self-employment, you’ll have to file a self-assessment tax return to HMRC each year.
You can do this yourself, or with the help of an accountant if you find it tricky to manage – and keep an eye out for self-assessment scams targeting those who are new to the process too.
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