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How to boost your income in retirement

How to boost your income in retirement

The average weekly pension income has stagnated over the last decade despite the dramatic rise in the cost of living. If you’re struggling, here are some simple ways to boost your bank balance.

lovemoney staff

Investing and pensions

lovemoney staff
Updated on 27 July 2022

Pensioners 'missing out on £1,000s'

Pensioners have seen their income stall in recent years, following many years of rapid growth, official data has found.

The Department of Work and Pensions said the average weekly pensioner income stood at £319 in 2009/10, a substantial jump from the £168 weekly income typically seen in 1995.

Yet more than a decade later, the incomes enjoyed by retired people today have only increased slightly, hitting £361 in 2020/21.

And of course today's pensioners are having to deal with far bigger monthly bills, with energy costs alone jumping more than £600 in just the last 12 months.

The squeeze on incomes isn't helped by the fact that many pensioners are missing out thousands of pounds a year in benefits that they're fully entitled to.

Pension firm Just Group claims that nearly half (49%) of pensioners it spoke to were failing to claim an average of £1,197 a year extra income through things like Guarantee Pension Credit, Savings Pension Credit and Council Tax Reduction.

The firm cited the extreme example of a couple in Kent who had missed out on a staggering £9,090 a year.

Stephen Lowe, group communications director at Just Group, said of the findings: “Every year we find meaningful income that would make a real difference to people’s lives is not being claimed.

"It reinforces the message that benefits information is integral to retirement guidance and that those struggling for income should check if they are missing out which many fail to do.”

But it's not just unclaimed benefits that could help boost your income in retirement.

This guide takes you through all the different options available to you if you need help making ends meet each month.

Get what you’re owed

There are a range of credits and welfare benefits available to pensioners, so make sure you get every last penny you’re entitled to.

Pension Credit, for example, can top-up low incomes to £182.60 for single people and £278.70 for a couple.

There’s also the Winter Fuel Payment which provides help for those born before September 26 1955 of between £100 and £300 a year.

Check out our comprehensive roundup in: The joys of getting older: perks, discounts and benefits you can claim.

Top up your State Pension

Those claiming the new State Pension may be able to boost their weekly payments through a Government initiative.

The State Pension top-up scheme allows you to ‘buy’ a boost to your pension income.

The only problem is you need to have a lump sum in order to purchase the boost to your income. The amount you pay depends on how much extra income you want and how old you are when you make the contribution.

Downsize your home

If you own your home another option to consider is downsizing.

This involves you buying a cheaper smaller property to live in that allows you to free up some of the equity you have built up.

A smaller home will be easier to maintain and is cheaper to run. Plus, the extra cash can help with other debts or allow you to live mortgage-free.

Take in a lodger

If you’re sticking with the family home late in life, chances are you have empty bedrooms.

Under the Government’s Rent a Room scheme, you can earn up to £7,500 a year tax-free from renting out a furnished room in your home.

You might find it an invasion of your privacy, or you might welcome the company – either way, it’ll definitely provide a regular source of income.

Rent out your drive

Another alternative could be to rent out your home’s parking space.

More and more people are on the hunt for a place to park near their workplace or music or sporting venues.

Depending on where you live you could make £100 to £200 a month from renting out your driveway via websites such as YourParkingSpace.co.uk or JustPark.com.

There are loads of other ways you can make money from your home read more in our easy ways to make money guide.

Equity release

The last tip for boosting your income is a controversial one - equity release.

In the 1990s, equity release schemes had an awful reputation, with many vulnerable pensioners being ripped off by some unscrupulous outfits. Thankfully, the industry is a lot better now.

If you fancy making use of the equity you have built up in your property, but can't face downsizing to take advantage of it, then equity release might be the right option for you.

There are various schemes to go for - you can get a lump sum, or a regular monthly income, or the ability to access your equity as and when you want to.

But remember, these schemes can be quite complex and will eat into the inheritance you can leave to your children, so be sure to talk to a financial adviser about the implications of signing up.

There is plenty of information on the various types of equity release mortgage on the Equity Release Council  website, who are the main trade body for the sector.

Where to find help if you are struggling

If you’re struggling on a low income don’t feel too proud or embarrassed to ask for help.

There are a number of bodies that are happy to talk through your situation and give you some guidance.

A good first step would be to get in touch with Citizens Advice.

Age UK also has a whole section of its website dedicated to providing guidance and tips on all matters financial, which is well worth a read.

 

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