What to consider when coming out of retirement

Key points:

• More retirees are returning to the workforce as cost of living pressures rise and workforce shortages form holes in important sectors
• Considering how many hours a week you are looking for in a job, what limitations you may have and what extra costs may be required are important
• Extra income or the acquirement of extra assets may impact your Age Pension, if you receive one

Retirees re-enter the workforce for many reasons – there may still be bills to pay, you may miss the sense of community and culture with colleagues, or maybe a former employer has asked you to come back to help fill workplace shortages.

A 2017 study published by Cambridge University Press revealed that about 25 percent of retirees return to the workforce and with the current COVID-19 pandemic changing the cost of living prices and creating other financial pressures, many more people are returning to work from retirement.

But there are some things to consider before jumping out of retirement and back into a job.

Getting back into the workforce

When figuring out what kind of work you would like to do when coming out of retirement, you should consider a few things to help you narrow down your job search.

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 may need to uphold and what hours would best suit these arrangements.

The intensity and demand of a job is also important to consider, as you may be looking to pick up something that is a little easier or less strenuous. You may need to ask yourself if you have any physical limitations that may restrict you.

Additionally, many jobs require a lot of use of technology. Are you computer literate? Or do you lack confidence in handling technological elements of a job like answering emails?

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 from your previous tenure.

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

Weighing up the costs

There can be additional costs associated with returning to work to consider, such as transportation expenses if your new job requires you to commute a substantial distance.

It is important to calculate these additional costs, including petrol and vehicle maintenance if you plan on driving, or tickets to ride public transportation.

Workplace attire and meals away from home can also mean other potential costs of returning to work.

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 likely 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 percent super contribution, plus any extra contributions you wish to make.

It is important to be familiar with the age and financial requirements as they can change, so it is wise to discuss them with a financial planner, accountant or your superannuation fund directly.

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 be receiving, such as the Age Pension.

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.

Currently, a single person can earn up to $190 a fortnight ($4,940 a year), and couples can earn a combined income of up to $336 a fortnight ($8,736 a year).

You are required to let Centrelink know you are receiving additional income within 14 days of going back to work. You can learn more about working while on the Age Pension in our article, ‘How does paid work impact on the Pension?‘

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 July 1, 2023, the age will increase to 67.

The scheme works automatically and $300 a fortnight is added to your Work Bonus balance, up to a maximum of $7,800 a year.

It is not money you can withdraw, but it acts as an offset in the income test for any extra money you earn.

So you could potentially earn an extra $300 a fortnight, on top of the amount allowed for singles and couples, without affecting your Age Pension.

That means a single person could potentially earn up to $490 a fortnight ($12,740 a year), and couples an extra $620 a fortnight ($16,536 a year), and still receive the maximum Age Pension.

Using online resources

These days, most companies post open positions, provide applications and accept resumes online so you should consider viewing their website for vacancies.

You can also search online to discover local job opportunities through job websites that can be filtered to show you a variety of positions in a certain field or location such as Seek and Indeed.

If you struggle with navigating the internet, you might be able to ask a family member or friend to assist you in navigating online resources. Most newspapers still run job advertisements, so you may be able to find work opportunities in your local newspaper.

Have you returned to work from retirement? Was it an easy process? Let us know in the comments below.

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Related content:

How does paid work impact on the Pension?
Planning for a secure retirement
Important questions to ask your financial advisor
The retirement income system explained