There is no fixed retirement age for people in the UK. People retire at different ages and in different ways. State Pension age is the earliest age when you can start to claim your State Pension but reaching this age does not mean you have to claim your pension or retire.
Working past State Pension age
More and more people stop work gradually, for example by working part time or changing the type and amount of work they do. You might choose to do this because you prefer to work a bit longer, or because you want to increase your retirement income.
If you work past State Pension age, you can choose whether or not to claim your State Pension at the same time as you're working. You don't pay National Insurance, and if you work past 65, the Government takes less from your pay packet in tax.
How do people choose when and how to retire?
The following two stories about John's and Ada's circumstances are based on real-life situations.
When I got into my 60s, I realised my State Pension plus work pension weren't going to be quite enough. I wish I'd thought about pensions earlier.
I spoke to my employer and looked online. I discovered I could make my situation better. My employer agreed I could continue working after I reached my State pension age.
I didn't exactly plan to carry on working, but there are benefits. I take home more wages for the same hours, because I pay less tax. And when I do claim my pension, I'll get more. I might take some of it as a lump sum to pay off the mortgage.
When I got to 65, I didn't feel ready to retire! I still felt active and liked meeting new people. I dreaded the thought of giving up work. So I decided to continue working.
I was finding it harder to lift things, which was a big part of my old job in the supermarket. So I switched jobs. I work in the bar of my local football club a couple of days a week. They liked the fact I had experience.
It's great to get extra money on top of my State Pension, especially as I've not had to pay National Insurance since I reached State Pension age. But it's really about meeting people and having a routine.
Three ways you may be able to increase your income after State Pension age:
- increase your State Pension by putting off your claim
- get a one-off lump sum
- earn more working the same hours
You can carry on working and claim your pension at the same time.
There are five key facts that you should be aware of:
- you don’t pay National Insurance contributions when you work past State Pension age which will boost your take-home pay
- your tax free allowance increases after 65, so you pay less tax on what you earn
- if you defer claiming your State Pension you could get a larger weekly amount when you do claim
- if you defer for more than a year you can choose to take a cash lump sum with interest
- you can work and claim your State Pension at the same time
The State Pension age is increasing for men and women. You can find out your State Pension age using the State Pension age calculator.