Sometimes all your pension plans can be knocked off-course by unforseen circumstances beyond your control. For the rest of us too many people are not saving enough for their retirement. For whatever reason most people would be happy to boost their income if they were able to do so. It all comes down to how much risk you want to take and how much extra money you want to earn. So, here are some of the best ways to earn a bit more to pay for the luxuries you wouldn’t otherwise be thinking about.
Make sure you maximise your state pension.
This is a no-brainer and should be top of your list even if you haven’t stop working yet. The state pension is now based on the number of years’ National Insurance contributions you have made over your lifetime. You can find out from the Government’s free state pensions advisory service how much you are likely to receive when you start drawing your pension.
If you have not made sufficient contributions in the past you can make up the difference by making a one-off payment, known as voluntary class 3 national insurance contributions. So for instance a one-off payment of £741 now could increase your annual pension income by £237. Not a huge amount, but as that represents a 32% annual yield, increasing year by year with inflation, voluntary contributions could be the best investment you could ever make! You can even make up the difference with a monthly direct debit if you prefer.
Defer claiming your state pension
You don’t have to claim your state pension immediately you reach retirement age. The longer you put off claiming, the more your monthly income will increase when you do start to claim.
The minimum deferment period is only five weeks.Then for every five weeks you defer, you’ll get a pension increase of 1%. This works out at 10.4% for every full year.
If you reached state pension age before 6 April 2016 and would have received the basic state pension of £122.30 a week, over a year you’d earn £6,359.60. Put off claiming for one year and your pension would have increased to £7021.00, an increase of £661 a year.
Your additional pension would qualify for inflation protection with a guaranteed annual increase of at least 2.5%. After 10 years the annual increase would amount to an extra £164 each year, and after 20 years nearly £400.
If you reach retirement age after April 2016, the rate of annual increase falls from 10.4% to 5.8%, making the offer less attractive. Even so, with guaranteed inflation protection the benefit is far higher than annuity rates at time of writing.
Don’t stop work
This is so obvious, but has to be on anyone’s list. Employers no longer have the right to lay you off so it is up to you to decide when you want to retire. You may even be able to negotiate reducing your working hours and going on to part-time, but you must make sure your rights are protected. Once you reach retirement age you no longer have to pay National Insurance contributions, but you will still have to pay income tax.
Making money from your home through vrumi
Airbnb offers an obvious way to make money from your home by renting whole or part of it for temporary over-night accommodation. However, not everyone is happy about strangers sleeping in their home and maybe sharing facilities, and there have been some really bad experiences when things have gone wrong.
A British company vrumi has applied the same concept for daytime use for small business owners, business meetings or lifestyle coaches. Hosts are able to make a room available, or indeed the whole building if they are not gong to be there on that day. Guests range from businesses looking for an informal off-site place for meetings or presentations, lifestyle coaches, small yoga classes – you name it.
Founded in 2014, vrumi concentrated initially in building up a presence in the London area where they now claim to have over 700 hosts offering different kinds of spaces. They are rapidly expanding into the regions, so now is a good opportunity to register your space. Registration is free and vrumi offer help in setting up your offer on their website. They charge a commission on each letting. Daily insurance to cover any possible damage is available at a nominal cost, and vrumi take care of all vetting, banking and payments.
Vrumi could be a really useful service for making money out of spare or unused space in your home. To find out more, check their website here.
Freelance work and consultancy
There are many ways you can carry on making money from the skills you acquired during your working life.
If you want to offer services on-line, sites such as retired4hire.co.uk offer a free platform for you to post a profile, and customers to post work opportunities.
For more information about other retirement income and pensions click here.