Can’t afford to retire yet?

This can be frustrating, however there are plenty of things you can do to boost your retirement income.

How can you boost your income in retirement?

Carry on working and access your pension pot later

Although you may be able to take your pension from age 55, the longer you leave it invested, the longer it has the potential to grow until you decide to take money from it.
Use your pension later

You can claim your State Pension once you reach your State Pension age. However you don't have to. Your State Pension will increase every year you put off claiming it.
Deferring your State Pension

Use your property

If you own a property you’re in a great position as you could:

  • rent out a spare room
  • sell and downsize to a smaller property
  • move to a different area.

If you rent, you may be able to reduce your rental amount by moving elsewhere.

Working in retirement

Gone are the days when your employer decided when you stopped working for them. These days, it’s up to you. That gives you the freedom to choose whether you continue to work, and how.

So what are your options? Let’s take a look

Option 1: Continue to work and defer taking your pension

You could leave your pension invested until you’re ready to take an income from it. You can defer taking your state pension too.

Option 2: Take money from your pension and carry on working

This can be a good way to top up your monthly income. Just remember that after your 25% tax-free lump sum, you’ll pay tax on any further money you take as part of your income.

As an example, let’s look at how much your weekly income could be if you were to keep working but also took the State Pension and an income from your pension (assuming a personal allowance* of £11,500, you’ve reached your State Retirement Age and you are entitled to the full State Pension):

*The personal allowance is the amount of income you can receive in a tax year before you start paying income tax.

  • Sources of income
    Weekly figures
  • State pension
    £159.55
  • Add
  • Annuity payments
    £100
  • Plus
  • Income from work
    £250
  • Equals
  • Total income before tax
    £509.55
  • Minus
  • Tax
    -£57.68
  • Equals
  • Your total net weekly income would be:
    £451.87

Based on tax year 2017/18

Option 3: Take a lump sum and carry on working

You can normally take up to 25% as a tax-free lump sum any time after your 55th birthday. You’ll then have to do something with the remaining 75%, such as buy an annuity, put the money into flexible drawdown or take it as cash.

Tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.

Is deferring right for you?

Read our case study: Nigel’s story
 

If you carry on working, how does this affect your pension?

Taking your pension doesn’t mean you need to retire. If you want to continue working, there are some important things to consider.

Your Scottish Widows pension

If you have a pension with Scottish Widows already and want to put more in, visit our Individual Pensions page for more information.

Find out more

Need more help?

The Pension Wise service is free and impartial guidance to help you understand what you can do with your pension pot.

Go to Pension Wise

Pension basics

Whatever stage of the retirement journey you’re at, get the basics before you go any further.

Find out more