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Part-Time Work in Retirement
Why many retirees keep working — and how to structure it for the best outcome.
The traditional image of retirement — stopping work on Friday and playing golf on Monday for the rest of your life — is increasingly outdated. Nearly one in five Australians over 65 is still in the workforce, and many more do occasional consulting, seasonal work, or "retirement jobs" that fit around their lifestyle.
Working in retirement isn't just about money (though it certainly helps). For many people, it provides purpose, social connection, mental stimulation, and a gradual transition rather than an abrupt cliff edge.
The Real Benefits of Working in Retirement
Financial: Extends your savings, delays drawing on super, may qualify for Work Bonus
Social: Workplace relationships, community connection, daily structure
Cognitive: Mental stimulation, continued learning, sense of purpose
Health: Studies show working longer (in the right role) is associated with better health outcomes
Types of Work in Retirement
Retirement work typically falls into four broad categories, each with different pros, cons, and financial implications:
Financial Implications of Working in Retirement
Working in retirement affects your finances in several ways. Understanding these interactions helps you optimise your overall position.
Tax Considerations
Work income is taxable like any other income, but as a retiree you may have access to additional offsets:
Tax Offsets for Older Workers
- Seniors and Pensioners Tax Offset (SAPTO): Available from Age Pension age, can reduce or eliminate tax on moderate incomes
- Low Income Tax Offset (LITO): Additional offset for lower incomes, phases out as income increases
- Medicare Levy exemption: May apply to very low incomes
Combined with the tax-free threshold ($18,200), these offsets mean many retirees working part-time pay little or no tax on their work income.
Superannuation Guarantee
If you're an employee earning over $450 per month, your employer must pay Superannuation Guarantee (SG) contributions — currently 12% of your ordinary time earnings. This applies regardless of your age, even if you're over 75.
These contributions continue to grow tax-advantaged, even if you're already drawing a pension from other super. However, they count toward your concessional contribution cap if you're also making additional contributions.
Centrelink Impact
If you receive (or might receive) the Age Pension, work income affects your payments through the income test. However, the Work Bonus provides substantial protection:
| Situation | Impact on Age Pension |
|---|---|
| Work income within Work Bonus balance | No impact — income not counted |
| Work income exceeds Work Bonus balance | Excess income counted against income-free area |
| Income above income-free area | Pension reduces by 50c per $1 over threshold (singles) or 25c each for couples |
Remember: the Work Bonus ($11,800/year) sits on top of the income-free area, giving Age Pension recipients significant income protection.
Consulting and Freelancing in Retirement
For professionals with valuable expertise, consulting can be an ideal retirement work arrangement. You leverage your career knowledge while controlling when and how much you work.
Getting Started as a Consultant
- Identify your niche: What specific problems can you solve? What do people pay for?
- Set up properly: ABN, business bank account, professional indemnity insurance if needed
- Price appropriately: Factor in no leave/super, and the value of your flexibility
- Build your network: Let former colleagues and industry contacts know you're available
- Keep records: Track income and expenses for tax purposes
Example: Consulting in Retirement
Background: Peter, 68, was a senior accountant. He consults 2-3 days per week, earning approximately $50,000 per year.
Structure: He operates as a sole trader with an ABN. He claims home office expenses, professional memberships, and training as deductions.
Tax position: After deductions, his taxable income is around $42,000. With SAPTO and LITO, his tax bill is approximately $2,800 — an effective rate of under 7%.
Centrelink: Peter also receives a part Age Pension. His net consulting income is offset by his Work Bonus balance, minimising pension reduction.
Self-Employment Considerations
Starting a small business in retirement can be rewarding, but requires careful thought. Unlike employment or consulting, you're building something that requires ongoing attention.
Questions to Ask Before Starting a Business
💭 Can I afford to lose the money I invest? (Never risk retirement savings on a business)
💭 What happens if I become unwell and can't work?
💭 Do I have an exit strategy? Can I sell it or wind it down easily?
💭 Am I doing this because I enjoy it, or just to fill time?
Tax Deductions for Self-Employment
Running a business allows you to claim legitimate business expenses, potentially reducing your taxable income:
- Home office costs (proportion of rent/mortgage interest, utilities, internet)
- Equipment and technology
- Professional development and training
- Vehicle expenses (if used for business)
- Professional memberships and subscriptions
- Accounting and legal fees
Keep detailed records and receipts. Consider using accounting software to track everything properly.
Gig Economy Work
Platforms like Uber, Airtasker, and delivery services offer maximum flexibility — work when you want, as much or as little as you choose. This can suit retirees who want occasional work without commitment.
However, be realistic about the downsides: rates are often low, some work is physically demanding, and you're responsible for your own tax, super, and insurance.
Common Gig Work for Retirees
- Rideshare driving: Flexible hours, social interaction, but vehicle wear and insurance costs
- Food delivery: Can be done by car, bike, or on foot — suits various fitness levels
- Odd jobs (Airtasker, Hipages): Use specific skills like handyman work, gardening, furniture assembly
- Pet sitting/dog walking: Good for animal lovers, flexible scheduling
- Mystery shopping: Get paid to evaluate retail experiences
How Much Should You Work?
The "right" amount of work in retirement depends on your goals and circumstances. Consider:
Finding Your Balance
Financial need: How much do you actually need to earn? Calculate your gap between expenses and guaranteed income.
Pension impact: At what point does working more actually cost you pension? (The Work Bonus provides significant buffer.)
Personal energy: Be honest about your capacity. Working too much can diminish retirement enjoyment.
Other priorities: What else do you want to do with your time? Family, travel, hobbies, volunteering?
Many retirees find a "Goldilocks zone" — enough work to stay engaged and supplement income, but not so much that it feels like they never actually retired.
Planning Your Retirement Work Strategy?
Understanding how work fits into your overall retirement plan takes careful consideration of tax, Centrelink, and personal factors.
Important Information
This information is general in nature and does not consider your personal circumstances. Tax and Centrelink rules change frequently. Always seek professional advice for your specific situation, particularly around business structures and tax implications.
Found an error or have a suggestion? Contact us — we'd love to hear from you.
Last updated: January 2026