How Older People Can Boost Their Income in Retirement: UK Options Explained
Published 24th of January 2013·Updated 22 April 2026
Reviewed by: Reviewed for accuracy April 2026
People in their late 50s and 60s often face higher living costs than younger adults, spending more on heating, healthcare and food while income may be lower or less predictable. There are several legitimate ways to increase income or reduce outgoings at this stage of life, from switching energy tariffs and claiming overlooked benefits to drawing from pension savings earlier than planned.
Short Summary
Many older people miss out on benefits they are entitled to. Age UK estimates that around £5.5 billion of Pension Credit goes unclaimed each year in the UK. A benefits check takes around 15 minutes and can identify entitlements worth hundreds or thousands of pounds annually.
Energy bills are typically higher for older households because people spend more time at home. Switching energy supplier or tariff through a comparison site such as Uswitch can reduce annual costs by £100 to £400 depending on your current deal.
Accessing pension savings early (from age 55, rising to 57 in 2028) is possible but reduces the pot available at full retirement. Take regulated advice before doing so, particularly if you have a defined benefit (final salary) pension.
Equity release lets homeowners aged 55 and over unlock cash from their property without selling it. It is a significant long-term financial commitment and should only be considered after taking regulated advice.
How can I check if I am claiming all the benefits I am entitled to?
Pension Credit is the most widely unclaimed benefit for people over State Pension age. It tops up weekly income to a minimum of £218.15 for single people and £332.95 for couples (2024-25 rates), and qualifying for it also unlocks free TV licences for the over-75s, cold weather payments and help with NHS costs.
You can check your Pension Credit eligibility and apply at gov.uk or by calling 0800 99 1234. Age UK's benefits calculator at ageuk.org.uk also covers Attendance Allowance, Council Tax Reduction and Carer's Allowance, which are frequently missed by older people who do not realise they qualify.
Citizens Advice can carry out a full benefits check in person or by phone. The service is free and impartial.
How can I cut my energy bills as an older person?
Energy costs are the single largest variable bill for most older households. The Warm Home Discount scheme provides a £150 reduction on electricity bills for eligible low-income households; eligibility is usually applied automatically if you claim Pension Credit, but you can also apply directly to your supplier.
Switching energy tariff through a comparison site such as Uswitch or MoneySuperMarket takes around ten minutes and can identify cheaper deals from suppliers including Octopus Energy, British Gas, E.ON and OVO. If you are on a prepayment meter, you still have the right to switch supplier.
The Cold Weather Payment scheme provides £25 for every seven-day period of very cold weather if you claim certain benefits. Winter Fuel Payments have been restricted since 2024 to those receiving Pension Credit or other means-tested benefits; if you previously received it and are no longer eligible, checking your Pension Credit entitlement is particularly important.
| Scheme | Amount | Who qualifies |
|---|---|---|
| Pension Credit | Up to £218.15/week (single) | Those over State Pension age with low income |
| Warm Home Discount | £150 off electricity bill | Low-income households |
| Cold Weather Payment | £25 per cold week | Pension Credit and certain benefit claimants |
| Attendance Allowance | £72.65 or £108.55/week | Over-65s with care needs |
Is it a good idea to draw from my pension before I fully retire?
From age 55 (rising to 57 in April 2028), you can begin drawing from a defined contribution pension while still working. This is called flexible drawdown or pension flexi-access. You can take up to 25 per cent of your pension pot as a tax-free lump sum, with further withdrawals taxed as income.
Drawing pension income early can help bridge the gap if you are reducing your working hours before full retirement. However, withdrawing more than you need increases your income tax bill and permanently reduces the pot available later. The Money and Pensions Service (MoneyHelper) offers free, impartial guidance at moneyhelper.org.uk and by phone on 0800 011 3797.
You cannot draw a defined benefit (final salary) pension early in the same way without the scheme's consent, and doing so typically involves a significant actuarial reduction to your eventual pension income. Taking regulated advice before accessing any pension early is strongly recommended.
What is equity release and is it right for me?
Equity release allows homeowners aged 55 and over to unlock cash from their property without having to sell or move. The most common form is a lifetime mortgage, where you borrow against your property and the loan, plus compound interest, is repaid when you die or move into long-term care.
The Equity Release Council (equityreleasecouncil.com) sets standards for its member providers. Schemes from member providers include a no-negative-equity guarantee, meaning you will never owe more than your home is worth.
Equity release permanently reduces the inheritance you leave and may affect means-tested benefit entitlement. The interest on lifetime mortgages compounds quickly: a £50,000 loan at 6 per cent doubles to around £100,000 in approximately 12 years if no repayments are made. Regulated advice from an adviser authorised by the FCA is legally required before taking out an equity release product.
Can I earn extra income while receiving my State Pension?
Yes. Working while receiving the State Pension is permitted and your earnings are taxed in the usual way. There is no State Pension earnings limit. If you are below State Pension age but receiving private pension income, the same applies.
Older workers have found income opportunities in consultancy, part-time roles, tutoring and the so-called gig economy (such as driving for platforms like Uber Eats). Renting out a spare room generates up to £7,500 tax-free per year under the government's Rent a Room scheme.
Frequently Asked Questions
What age can I access my pension in the UK?
Currently 55, rising to 57 in April 2028. The minimum access age applies to defined contribution pensions. Defined benefit (final salary) pensions have their own normal retirement age, usually 60 or 65, and early access involves a reduction to the annual pension amount.
Can I increase my State Pension by deferring it?
Yes. For every nine weeks you defer claiming your State Pension, the weekly amount increases by 1 per cent, which equates to around 5.8 per cent per year. Deferring for a full year adds approximately £11 per week to the new full State Pension (based on 2024-25 rates). The decision depends on your health and other income sources; MoneyHelper can help you model the numbers.
What is Pension Credit and am I eligible?
Pension Credit is a means-tested benefit for people over State Pension age with low income. It comes in two parts: Guarantee Credit tops up your income to a minimum weekly level, and Savings Credit (for those who reached State Pension age before 6 April 2016) rewards modest savings. Eligibility depends on your income and capital. Apply at gov.uk or by calling 0800 99 1234.
Is equity release a good idea?
Equity release can provide a useful lump sum or regular income if you are asset-rich but cash-poor and do not need to leave your property as inheritance. It is not the right solution for everyone. The compound interest on a lifetime mortgage can significantly erode the equity in your home over time. You must take regulated financial advice before proceeding. The Equity Release Council's member finder is at equityreleasecouncil.com.
What free services help older people with their finances?
Age UK (ageuk.org.uk) offers free benefits checks, financial guides and local advisers. The Money and Pensions Service runs MoneyHelper (moneyhelper.org.uk) and provides free pensions guidance. Citizens Advice offers free debt, benefits and financial advice. StepChange (stepchange.org) provides free debt advice for those in financial difficulty.