There are basically four ways to give your retirement finances a boost: your home, work, investments and state benefits (and other state support).
Your home
Three-quarters of people aged 65 and over own their home outright, and a further 3 per cent are homeowners with a mortgage, according to the government’s Family Resources Survey. Your home is not just a place to live, it offers several different options for boosting your income: moving some-where smaller, taking in lodgers or raising money on your home through equity release. All the possibilities are explored in Chapter 6, Your home.
Work
Your employer may allow you to switch to part-time working. This can be an attractive option if you like your job, because work is not just about earning money but can also be a source of intellectual stimulus, social contact, identity and self-esteem. By law, most jobs do not have a compul-sory retirement age, but there is usually a normal pension age. However, you may be able to defer your work pension (and/or your State Pension) if continuing to work means you don’t need it yet (see Chapter 3) and this can boost your pension when its does start (see Chapter 3) and help to keep down your tax bill while working (see Chapter 4).
Retirement for you may offer the chance of a job change or setting up on your own. When you do the figures, it is as well to err on the side of caution with regard to any additional income this will provide: there is a lot more information on work, and how to get it, in Chapters 9 and 10.
Investments
Investing is not just the preserve of the rich. Increasingly, people are reach-ing retirement with a sizeable pension pot and need to decide how best to use it to provide an income. There is a mind-boggling array of financial products, and if managing your own investments is something you haven’t done before, it can be fascinating and rewarding for some but daunting for others. You will see in Chapter 5 the various forms investment can take.
State benefits
You may be entitled to money or other benefits from the state.
From 2022 to 2024, help from the state has also included one-off schemes to help with the cost-of-living crisis. But these payments probably will not be repeated beyond spring 2024.
There are two main types of benefits: contributory, where your entitle-ment is due to having paid National Insurance contributions; and non-contributory, where your entitlement depends either on low income and savings (means-tested benefits) or your circumstances regardless of income. Some state benefits are taxable and others tax-free – see Chapter 4.
If you are under State Pension age, claiming benefits is doubly important because it not only provides financial help now but also protects your even-tual State Pension (explained in Chapter 3).
The main contributory benefit is State Pension and you’ll find details about this in Chapter 3. Paying National Insurance may also entitle your surviving wife, husband, civil partner or, if a parent, unmarried partner to bereavement benefits if you die – see Chapter 15.
The following sections give a brief outline of some of the other more common benefits which you might be able to claim. The benefit system is complex and you can get information and advice from these organizations (see Directory, p 2), some of which include calculators to help you work out what you are entitled to, which are free to use and anonymous:
- Age UK: Benefit details and calculator
- Citizens Advice: Benefit details
- entitledto: benefits calculator
- GOV.UK: Benefit details and how to claim
- Policy in Practice: Benefits calculator which can be combined with budgeting tools
- Turn2us: Benefit details and calculator
ATTENDANCE ALLOWANCE
This is a non-contributory, non-means-tested allowance. You may be eligi-ble if you are over State Pension age and have a physical or mental disability that means you need help from others. The aim is to help you cope with the extra costs this involves, but you decide how to use the cash.
There are two rates: £68.10 a week (in 2023/24) if you need help during the day or night and £101.75 if both apply or you are terminally ill. You apply by post using a detailed claim form that you can download from the GOV.UK website or order by calling 0800 731 0122.
In Scotland, an equivalent benefit called Pension Age Disability Payment is due to be introduced to replace the existing benefit.
If you are under State Pension age you may instead be eligible to claim Personal Independence Payment (PIP) or its Scottish equivalent (see below).
CARER’S ALLOWANCE
If you are caring for at least 35 hours a week for someone who gets Attendance Allowance, PIP or certain other disability-related benefits, you may be able to claim Carer’s Allowance. This provides £76.75 a week (in 2023/24). However, the rules are quite complex:
- If the person has more than one carer, only one of you can claim.
Getting Carer’s Allowance can cause a reduction in other benefits you or the person being cared for gets, but can increase others such as Pension Credit (see below). Use one of the benefit calculators listed earlier in this section to check how other benefits may be affected.
You’re not eligible if you are getting State Pension, have after-tax earnings of more than £139 a week or are studying for 21 hours a week or more.
Claim online on the GOV.UK website, download the form and post it to the address on the form, or contact the Carer’s Allowance Unit on 0800 731 0297. If you live in Scotland, you may be eligible for Carer’s Allowance Supplement – contact Social Security Scotland (Directory, p 5).
COUNCIL TAX REDUCTION OR SUPPORT
Council Tax Reduction (also called Council Tax Support) is a means-tested benefit to help people on a low income pay some or all of their council tax. The help is given as a reduction in your council tax bill. Each local council sets up its own scheme, so the amount of help you get varies not just with your income and savings, but also where you live. You can claim this even if you don’t get other benefits. Contact your local council to make a claim – find details at GOV.UK (Directory, p 2).
Regardless of your income and savings, you might qualify for a reduction in council tax if you live alone or have a disability or an exemption for certain types of property – there are details in Chapter 6.