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Working late: Contracting after retirement

Gone are the days of trading the workday for the armchair as soon as you hit pensionable age. More than half of UK adults say they plan to work after they retire from their primary job, making so-called “cliff-edge” retirement a thing of the past. Indeed, a significant chunk (6.9%) of the current Liquid Friday contractor workforce is over 60.  

There’s no doubt that this is a trend driven by financial pressures and the rising cost of living. However there are other considerations too. People are living longer, often healthier lives and are simply not ready to completely exit the workplace as soon as they get their bus pass! 

Many find that staying in work is beneficial for their mental and physical wellbeing. They derive a sense of satisfaction and purpose from work and enjoy the opportunity for social contact. 

That being said, the majority of individuals who chose to work into retirement want the flexibility to wind things down and enjoy more leisure or family time. Some choose temporary work, side gigs or part-time hours to achieve a good work-life balance. Working as a contractor can also be a great option for a post-retirement career.

Benefits of contracting post-retirement 

Supplemental income

We’ll start with the obvious. Taking on contract work provides a way to top up your retirement income, allowing you to maintain your standard of living or pursue additional financial goals. In some sectors, contractors over 60 get the highest average daily rate out of all age groups, so contracting can be a very lucrative bridge to full retirement.


Another big plus for contracting. It offers greater flexibility than traditional employment, allowing you to pick and choose when and where you want to work. This can be particularly beneficial if you have other commitments or interests that you want to pursue, or only want to work for part of the year.

Keeping sharp

Staying active in your profession keeps your skills and knowledge up-to-date. Even if you are in the autumn of your career, you may want to stay engaged in your field, perhaps even explore training or mentoring opportunities. 


Many retirees say they continue working, or in some cases return to work, for personal and professional fulfillment. Often people are not ready to give up being defined by their career, and want to continue making a positive contribution to society and the lives of others.   

Retirement earnings and pensions

If you choose to carry on working after State Pension Age any money you earn will not affect your State Pension. However it may affect your entitlement to other benefits such as Pension Credit, Housing Benefit and Council Tax Reduction.

If you have a private or occupational pension, your earnings will not reduce the pension you receive. However if you are working and paying tax, your tax code will be adjusted to take into account the amount of pension you receive.

If you are working past retirement age, and have income from a job and a pension, you could well have more than one tax code. Check your codes carefully to ensure you are paying the right amount of tax. Our article, Understanding your tax code 2023/24, may be useful. 

Increase in annual pension allowance

This year’s increase in the Annual Pension Allowance is another factor influencing the decision to carry on working post-retirement. 

From 6th April 2023, the annual allowance for tax relief on pension savings in a registered pension scheme increased from £40,000 to £60,000. 

Individuals who continue to work post-retirement can continue building their pension pot by reviewing their salary sacrifice arrangement and paying more in; now up to £60,0000 annually without paying tax. 

Age is just a number! 

Mature contractors are in demand in the workforce, as clients recognise the value they bring in skills, knowledge and experience. In fact a global AARP study found that 83% of business leaders said that a multigenerational workforce is the key to growth.

As a contractor you get to enjoy freedom, flexibility and greater control over your working life. If you’re approaching retirement age but not quite ready to be a fully-fledged pensioner, contracting offers a flexible transition into retirement. 


Liquid Friday makes contracting easy. We can support you in all your temporary assignments and offer great service and benefits. Find out more about working with us.

We are also partnered with Money Helper to help you find the right advice for all things related to your finances, including guidance on pensions and retirement. Click here to find out more.