You should be able to enjoy your retirement. After all you’ve worked hard enough for it. Unfortunately, however, too many pensioners are forced to scrimp and save just to get by when they stop work. Fortunately, there are some easy ways to supplement your pension.
- Consider deferring your State Pension for extra money
- Make sure you get the best annuity rate
- Earn an extra £350 per year whilst you shop
- Slash your day-to-day costs
- Grab senior discounts and perks
The most effective way to boost your retirement income is to keep working past the traditional retirement age. There’s no compulsory retirement age for most jobs, so you should be able to continue in your current role until you are ready to retire. If you prefer, you can opt for phased retirement, where you gradually reduce your hours. Alternatively, you can move into a new role, which may be more suitable for your age. You can even work for yourself (we have lots of money-making ideas here for over-60s). There are tax benefits to working past your State Pension age, because you don’t pay National Insurance.
If you decide to continue working, you can put off claiming the State Pension – which will boost your pension when you eventually come to claim it. As Directgov explains here, you can increase your pension by 1% for every nine weeks you put off claiming. This works out as 5.8% extra a year. So, if your State Pension was £155.65 a week (or £8093.80 a year), and you deferred payments for a year, it would rise by £468 a year.
This is less generous than the system was before April 2016, and you can no longer take the extra as a lump sum. However, it is still worth considering for anyone with a normal life expectancy. You can get further details on the Pensions Advisory Service website.
Before making any decisions, you should apply for your own State Pension forecast. This will show how much you can expect from the government, based on your National Insurance contributions. Remember to see if you are entitled to Pension Credit. In 2016/17 this boosts your income to £155.60 if you are single, and £237.55 for couples.
When you decide to take an income from a private or workplace pension, you have a number of options. You can cash it all in, draw an income from it, or spend at least part of it on an annuity to secure a regular income. If you do decide to buy an annuity, it’s vital to shop around. Far too many people simply accept the annuity rate offered by their pension provider, which could well be one of the worst rates on the market. Instead you should take what is known as the Open Market Option (OMO) – your legal right to buy an annuity from any provider on the market.
Cashback sites are a simple but effective way to raise some extra spending money. You can earn a portion of the price of most goods back if you buy them through one of the many cashback sites online.
All you have to do is check to see whether there is any cashback available from any retailer. If you decide to go for it, simply select the deal that you like and the cashback site will direct you to the retailer’s website, so that you can shop as normal.
The only caveats are to stick with reputable sites, and read all the terms and conditions so that you know how and when you get paid. If you plan to use these sites often, then you can consider paying an administration fee for an enhanced account. This will be deducted from your cashback, and will usually pay off for any regular user.
As well as making a little extra money on the side, you should also ensure that your everyday costs are as low as possible. Rising energy prices are a real concern for all of us, but particularly for vulnerable pensioners.
Contact Warmfront.co.uk, which offers grants to people on for insulation and heating improvements to those on certain benefits – including Pension Credit.
You should also compare available tariffs for your utilities on a dedicated energy comparison site. Switching is usually a painless, speedy process (we take you through the process in our guide to switching energy providers) and if you’ve never switched before you could save over £400 a year.
Remember that if you’re concerned about inflation and rising energy prices, a fixed-price tariff may be the best option. These may not be the cheapest to begin with, but offer peace of mind.
Exclusively for the over 60s, the Senior Railcard will cut the cost of train travel by a third. Get it online or from your local train station for just £30 (lasting 12 months). You’ll even get additional discount at various retailers as a cardholder – read all about it here.
Of course, you don’t need to stick with exclusive senior discounts – you can make the most of any special offers or voucher codes. Sign up to our free weekly newsletter to have the best deals around sent straight to your inbox.