10 ways to boost your income after you’ve retired

The need to save into a private pension while working, in order to have a good quality of life later, has been drilled home by retirement experts. But what if it’s already too late for that, and you’ve already finished your career? Boosting your income once you’ve already left the workforce can be more tricky than doing so before – but it’s still possible. Shorts Experts share their top tips for increasing your income once you’ve hit your sixties, seventies or eighties. Make use of the marriage allowance The marriage allowance lets you transfer £1,260 of your personal allowance – the amount you can earn tax-free – to your husband, wife or civil partner. If you’re married, this can cut tax bills by up to £252 in the tax year, though it only works if one of you earns below the £12,570 personal allowance and the other earns between £12,571 and £50,270. There are slightly different rules in Scotland. Say your income is £11,500 and your partner earns £20,000. The partner pays 20 per cent tax on the £7,430 over the personal allowance. If you transfer £1,260 of your personal allowance to your partner, your allowance becomes £11,310 and your partner gets a reduction of £1,260 on their taxable income. This means you will now pay 20 per cent tax on £190 – the difference between £11,310 and £11,500 – but your partner will only pay tax on £6,170. You save £214. Rent out a spare room Estimates from property website Zoopla suggest the over-65s have 10 million spare rooms between them – and they can take financial advantage. The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. The threshold is halved to £3,750 if you’re sharing the income as part of a couple. You can earn more than the threshold but you have to fill out a tax return. Spread your pension income to limit the tax you pay Aside from your tax-free lump sum – up to 25 per cent of your pension pot – the income you take from your retirement pot is charged at your marginal rate, which means if you are taking between £12,570 and £50,270, you’ll pay 20 per cent income tax, and above this, 40 per cent. Above £125,140 you’ll pay 45 per cent. This means it’s important to spread how you take your money, to limit the tax you’ll pay. Ian Cook, chartered financial planner at Quilter Cheviot, said: “The way you take your income in retirement can have a significant impact on the amount of tax you pay. “While it may be tempting to make large withdrawals from your pension to fund major purchases or gifts, doing so can push you into a higher rate of income tax and result in a larger proportion of your withdrawal being paid to HMRC.” ‘Unretire’ part-time Research from Standard Life suggests that 16 per cent of retirees have either already returned to work or are considering it. As well as the salary, if you are working and under 75 you can opt in to a pension and your employer has to pay into it for you, as long as you’re making at least £10,000 a year. Under most automatic-enrolment schemes, the minimum contribution is 8 per cent of pensionable earnings, with at least 3 per cent coming from the employer. Those percentages are normally calculated on qualifying earnings between £6,240 and £50,270. You can opt to pay more in and you’ll get tax relief on what you pay. Check you’re claiming benefits you’re entitled to There are lots of benefits that those above state pension age are entitled to but don’t claim, such as pension credit, which you may get if your weekly income is under £238 if you are single or £363.25 if you are in a couple. Nearly one million pensioners miss out on average £50 per week or £2,600 per year by not claiming the benefit, according to Age UK. “For older people trying to manage on a limited retirement income, every pound counts. Even a small weekly top-up can have a meaningful impact on day-to-day living costs so it is worth checking what support may be available to you,” says Caroline Abrahams, charity director at Age UK. Some may be missing out on so-called “passported benefits”, which you can become entitled to if you get pension credit, such as council tax discounts and free TV licences for over-75s. Check you’re on the best utility deals Pensioners can save by checking they are getting the best deal for things like insurance, utilities and other subscriptions, or by switching to other providers. Sabrina Hoque, expert at Uswitch.com, said: “Switching to a new broadband deal once your contract has ended could save £395 a year, and swapping an ending 24-month handset contract for a SIM-only deal – while keeping the same phone – could save a further £262 a year.” If you’re on pension credit, you can also check if you can get a broadband social tariff. Check your state pension record is correct If you have retired since 2016, you’ll be on the new state pension – but you only get the full amount if you have what’s known as 35 qualifying years. With the basic state pension, for those who retired before 2016, it’s 30 years. If you have less than this, it’s worth checking your record is correct on the government website, and if you have fewer years than you expected, you can try and fix it. Look for years where you worked or were entitled to carer or child benefit credits, and also look out for missing home responsibilities protection (HRP). HRP was applied to the national insurance (NI) records of those who claimed child benefit between 1978 and 2000, to protect their state pension. However, if someone claimed child benefit before May 2000 and did not provide their national insurance number on their claim, HRP may not have been applied. Contact HMRC to correct the record. Check if you can claim grandparent credits If before reaching state pension age you cared for a grandchild or other family members while the parents were at work, you could boost your record too. Many working-age grandparents could qualify for class 3 national insurance credits for looking after children aged under 12. If the grandchild’s parents were going to work and paying NI while claiming child benefit they can transfer the credit to grandparents by filling out a form. Claims can be backdated to 2011, and boost how large a state pension you can get. Pay into a pension from savings If you’re not working, you can pay up to £2,880 a year into your pension from savings and you’ll get tax relief to take it to £3,600. In some circumstances, if you’re then simply going to pay tax on the money when you withdraw it from a pension, there may be no gain. But in some circumstances, such as if you’ve not yet taken your pension tax-free cash, there could be an advantage. You can normally take up to 25 per cent of your private or workplace pension as tax-free cash, subject to an allowance of £268,275. So, if you still have unused tax-free cash entitlement, adding money to your pension can increase the amount you are eventually able to withdraw tax-free. Check your pension and ISA investments are right for you As you approach retirement, lots of pension firms will use something known as “lifestyling” on your money – an automatic investment strategy which gradually shifts savings from high-risk assets like shares into lower-risk assets. But if you want, you can opt to move your savings back into riskier funds that may produce better returns, as long as your comfortable with the risk. Sarah Coles, head of personal finance at AJ Bell, said: “If you’re an experienced investor, comfortable you understand your needs and can pick a portfolio of funds and shares, to match, then you can take your pick from everything the market has to offer. “If you’re a beginner investor, and are overwhelmed by the idea of making choices, especially if you have built a large fund, it could make sense to get financial advice so your decisions are in the hands of a professional.”