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Is it ok to work part-time in retirement, and will it affect my age pension?

March 2, 2024

Yes, it is perfectly okay to work part-time in your retirement years, and the impact on your age pension depends on two key factors: your earnings and your pension status. Let’s discuss this in detail.

Definition of Part-Time Work in Retirement

In retirement, Australians define “part-time work” as any paid employment involving fewer weekly hours than a traditional full-time position. This generally ranges from 15 to 25 hours per week, although specific hours can vary based on personal preferences and flexible arrangements.

The primary advantage of a part-time job for retirees is utilising their expertise and skills while enjoying a more relaxed schedule and reduced time commitment compared to full-time employment.

The Growing Trend of Working Part-Time in Retirement

A notable and growing trend among Australians in retirement is the choice to pursue part-time employment. This trend is influenced by several factors:

  • Financial considerations: As living expenses rise and life expectancy increases, retirees are driven to seek additional income to supplement their superannuation savings.
  • Social and mental well-being: Working part-time provides retirees with structure, purpose, and mental stimulation, which are essential for maintaining overall well-being and combating feelings of isolation.
  • Skills and experience: Retirees often possess valuable knowledge and skills that remain relevant in the workforce, and part-time work allows them to continue utilising and sharing their expertise.
  • Lifestyle: Part-time work offers retirees a balanced lifestyle, allowing them to enjoy leisure activities while earning additional income and staying connected to the workforce.

Benefits of Part-Time Work in Retirement

Retirement shouldn’t mean putting your feet up and never working again. Many Australians are discovering the many benefits of working part-time in their golden years. Let’s explore three key advantages.

Financial Benefits

  • Supplementing Retirement Income: Rising living costs and healthcare expenses can stretch even the most carefully planned retirement budgets. Part-time work provides extra income, allowing retirees to maintain their desired lifestyle, travel, or support loved ones.
  • Boosting Retirement Savings: Extra income from part-time work can be saved or invested, providing a financial cushion for unexpected expenses or future healthcare needs.
  • Delaying Social Security Withdrawal: Working part-time and relying less on social security reduces the amount retirees need to draw from their superannuation or other retirement savings accounts, helping to preserve those funds for later years.
  • Health Insurance: Some companies provide health benefits even for part-time employees. This could be very beneficial for people who retire before the age of 65.

Social and Psychological Benefits

  • Combating Loneliness and Isolation: Retirement can lead to social isolation for some. Part-time work provides opportunities to interact with colleagues, clients, and customers, combating loneliness and boosting mental health.
  • Maintaining a Sense of Purpose and Identity: Paid work can provide retirees with a sense of purpose and structure, especially those who define themselves by their careers. It can also boost self-esteem and confidence.
  • Cognitive Stimulation and Mental Acuity: Regular mental stimulation keeps the brain sharp and reduces the risk of cognitive decline. Part-time work can provide this stimulation, keeping retirees engaged and mentally active.

Maintaining Skills and Staying Active

  • Sharing Expertise and Mentoring: Retirees possess valuable skills and experience that can benefit younger generations. Part-time work allows them to share their knowledge, mentor others, and contribute to their communities.
  • Staying Physically Active: Depending on the nature of the work, part-time jobs can involve physical activity, contributing to overall fitness and health. This can be especially beneficial for retirees who want to maintain an active lifestyle.
  • Learning New Skills: Part-time work can be an opportunity to learn new skills, pick up hobbies, or explore new areas of interest. This keeps retirees engaged and prevents boredom.

Impact of Part-Time Work on Age Pension Eligibility

The Australian government encourages retirees to stay engaged in the workforce through the Work Bonus scheme.


  • Under $300 per fortnight: You can earn up to $300 per fortnight from part-time work without affecting your full-age pension entitlement. This is thanks to the government’s “work bonus” initiative. When an age pensioner does not utilise the entire $300 per fortnight available, the unused portion accumulates in a work bonus balance, which can reach up to $7,800.
  • Over $300 per fortnight: If your employment income exceeds $300 per fortnight, it will be counted towards the income test for the age pension. This means your pension amount might be reduced, depending on the total income you receive.

Pension Status

  • Receiving a full-age pension: As mentioned, you can earn up to $300 per fortnight without impacting your full-age pension. However, any income above that will be assessed under the income test.
  • Partially receiving age pension: If you only receive a portion of your age pension due to exceeding the income test threshold, which is $300 per fortnight, your remaining entitlement can be further reduced based on your part-time earnings.

Strategies for Maximising Age Pension While Working Part-Time

Working part-time in retirement can be a fantastic and healthy way to stay active, and engaged, and supplement your income. However, to truly maximise your Age Pension while doing so, understanding the rules and employing strategic planning is key. Here are three crucial strategies to help you achieve this:

  • Income Test: As mentioned before, earning up to $300 per fortnight through part-time work won’t affect your full-age pension thanks to the Work Bonus. Beyond that, every dollar earned above this threshold could reduce your pension by 50 cents. This means staying within the $300 limit is crucial.
  • Assets Test: The value of your assets, excluding your primary residence, is also assessed. Depending on your age, relationship status, and homeownership, higher asset values can impact your pension entitlement. It’s important to understand how much you can hold in assets before your pension is affected.
  • Income Exemptions: Certain types of income are exempt from the income test, like gifts from family and friends, and certain Centrelink payments. Utilising these exemptions can help you stay within the $300 limit despite earning more money.
  • Assets Exemptions: Your primary residence and surrounding land (up to 2 hectares on the same title) are exempt from the assets test.
  • Concessions: You may be eligible for additional concessions like reduced healthcare costs or cheaper public transport if you receive the Age Pension, which can further stretch your budget.
The intricacies of retiring under the Age Pension system can be complex and nuanced. Consulting a qualified financial advisor specialising in retirement planning can be invaluable. They can help you:

  • Understand your specific eligibility and age pension entitlements based on your circumstances.
  • Develop a customised strategy to maximise your Age Pension while working part-time.
  • Optimise your income and expenses to stay within the income test threshold.
  • Navigate the complexities of the assets test and utilise available exemptions.
  • Plan for future changes in your financial situation and adjust your strategy accordingly.

Final Thoughts

Working part-time in retirement can be a great way to stay active, supplement your income, and boost your social connections. However, it’s essential to understand how your earnings might affect your age pension and adjust your plans accordingly. It’s always best to seek personalised advice from a financial professional to ensure you’re making the most of your situation.

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Micheal is a financial expert with over a decade of experience in the field. Growing up in countryside Victoria, and later moving to Melbourne to pursue higher education, Micheal has since then been working in the financial industry for over 13 years with much of his career spent as a financial advisor. He holds the prestigious Certified Financial Planner designation and is a registered member of the Financial Planning Association of Australia. Micheal is also a dedicated family man and proud father of 3 amazing children. When he isn’t working or spending time with his family, he enjoys outdoor activities such as hiking and camping.

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