Retirement isn’t always a full stop to earning an income. Plenty of older Australians keep working — some for financial reasons, others for social connection, personal fulfilment, or simply because they enjoy it. But how does paid work affect your Age Pension? That’s where things can get confusing.

The system has a reputation for complexity and can even discourage seniors from staying in the workforce. At the same time, official reports note that older Australians are healthier, living longer, and increasingly participating in paid work. The challenge is balancing that opportunity with rules that were, in part, designed to ensure pension fairness but which some say have become barriers.



Government reviews have acknowledged both sides of this coin. The latest Intergenerational Report highlights that more seniors are working as longevity increases, while the Retirement Income Review found that constant policy changes and complex pension rules create uncertainty, eroding confidence in working and adding to superannuation anxiety.

In other words, many older Australians could work a bit and want to – but they worry about navigating Centrelink’s rules and possibly losing benefits. Advocacy groups like National Seniors Australia have even called for simpler rules or a universal age pension with fewer strings attached.

Until any big reforms happen, though, it’s worth understanding how the current system works in real life – especially if you’re an older Aussie contemplating some extra income on the side.

Working on the Age Pension: The Ground Rules​

So, can you still work and get the Age Pension? The short answer is yes – the rules allow it, within limits. The key is something called the Work Bonus, which is designed to let pensioners keep more of their pension while working. In a nutshell, the Work Bonus means your earnings from work are partly ignored (“discounted”) under the pension income test. Here’s how it works in practice:

• $300 fortnightly exemption: The first $300 you earn from work each fortnight does not count toward the Age Pension income test. In plain terms, you can earn up to $300 every two weeks ($150 per week) and it won’t reduce your pension at all.
  
  
• Income bank for unused amounts: If you earn less than $300 in a fortnight, the unused portion (say you earn $0, $100, etc.) gets added to your Work Bonus “bank”. This bank can build up to a maximum of $11,800 in credits. These credits will accumulate over time if you’re not working, and they can be used later to offset higher earnings in a busy period. (Before recent changes, the cap was $7,800, but the government boosted it by a one-time $4,000 for new pensioners as of late 2022, effectively increasing the limit to $11,800.)
  
  
• One-time $4,000 boost for new retirees: If you reached Age Pension age and started on the pension recently, you probably received a $4,000 credit added to your Work Bonus bank automatically. Since 1 January 2024, every new Age Pensioner gets this upfront $4k boost to encourage workforce participation. It’s essentially a head-start in your income bank, letting you earn up to $11,800 from work before your pension is touched.
  
  
• Use it or save it: When you do work and earn money, any available credits in your Work Bonus bank will be used first to offset that income. For example, if you’ve built up $1,000 in your bank and then earn $1,300 in a fortnight, the system will subtract $1,000 (using your credits) so that only $300 counts as “income” for the pension test. If your work income is below $300 in a fortnight, it’s fully offset (reduced to zero for the income test) and any unused part of that $300 allowance just goes into your bank for the future. This is handy if your work is irregular – you get a buffer for the busier times.
  
  
• No need to reapply if you pause pension: Importantly, if you do earn “too much” and your Age Pension stops because your income exceeds the limit, your pension isn’t cancelled outright – it’s put on hold. You remain on the books for up to two years. If you later reduce or stop working, you can restart your payments without having to lodge a whole new application. This recent rule change was meant to reassure pensioners that trying a stint of work won’t forever boot them off their pension. (Just remember to inform Centrelink when your income changes – more on the reporting process shortly.)
  
  
• Only work income gets this treatment: The Work Bonus only applies to earnings from actual work (whether as an employee or self-employed). It doesn’t apply to other types of income like investment earnings, rent, or your superannuation drawdowns. Those kinds of income are assessed under the normal rules. Also, if you have a partner, you each have your own separate Work Bonus – you can’t transfer your $300 allowance to your spouse or vice versa.

In practical terms, what do these rules mean for someone on the Age Pension? Let’s break down a typical scenario. Say you’re a single pensioner with no other income and you decide to take a casual job for a bit of extra cash.

You could earn up to $300 a fortnight (about $7,800 a year) from that job and it wouldn’t affect your pension payments at all. In fact, if you hadn’t been working for a while, you might have accrued a nice Work Bonus balance, so you could potentially earn even more for a short time with no effect. Only once you exhaust any accrued Work Bonus credits and earn beyond $300 in a fortnight will your wage start to “cut into” your pension.

The Age Pension income test threshold for a full pension is quite low – around $212 per fortnight for singles (a bit higher for couples). Above that, the pension is reduced by 50 cents for every dollar of assessable income. This means if you earn more than the Work Bonus covers, your pension will start tapering down.

For example, if after applying the Work Bonus you still have $1,000 as assessable income in a fortnight, that would reduce your fortnightly pension by about $500 (because of the 50c in the dollar taper).

The government indexes these thresholds, so the numbers can change slightly over time; as of 2025, a single person can have roughly up to $2,500 in income per fortnight (including from work, investments, etc.) before the pension cuts off entirely. In other words, there is no absolute “you can’t work” rule – it’s all about how much income you have and how the taper design works.

If those numbers made your eyes glaze over, you’re not alone. The takeaway is: a little work won’t hurt your pension, thanks to the Work Bonus. It’s quite possible to mix part-time work and the Age Pension. In fact, the government has been tweaking these rules recently to encourage seniors to stay in jobs if they wish. It permanently increased the Work Bonus bank limit to $11,800 and gave that $4k upfront credit to new pensioners.

From July 2024, it also started letting pensioners who find work keep their valuable Pensioner Concession Card for longer (up to 6 months while off payment) – recognising that losing concessions was a fear for many. All these changes aim to make “working in retirement” a bit more attractive and less of a bureaucratic hassle.

Why Keep Working? More Than Just Money​

If you’re of pension age, you grew up thinking retirement would be a time to finally relax. So why are a growing number of Australians in their late 60s and 70s still clocking in – whether at an office, a local Bunnings, or even volunteering for a bit of stipend? For many, it’s about staying active and connected to the community. Work can provide structure to the week, social interaction, and a sense of purpose. As one retiree quipped, “I’m not ready for the rocking chair yet.”

Of course, there are financial reasons too. Cost-of-living pressures have surged in recent years, and a lot of retirees are feeling the squeeze. In a recent National Seniors survey, 80% of older Australians said their living costs have gone up and impacted them, and a vast majority (over 90%) are worried about keeping up with expenses. Essential costs like groceries, utilities, and fuel don’t spare you just because you’re 70. The Age Pension, while indexed to inflation, often just covers the basics.

As one 67-year-old pensioner, Bev Foster, explained, working part-time gives her “just enough money to keep my head above water because the pension definitely doesn't cover any extras at all”. Those “extras” could be a dinner out, a birthday gift for a grandchild, or a new pair of shoes – things the budget might not stretch to on the pension alone.

Another big factor is superannuation shortfalls. Australia’s compulsory super system only kicked in during the 1990s, meaning many of today’s retirees didn’t have the benefit of contributing over their entire working lives. Especially for women of the Baby Boomer generation, career breaks for raising children or years in lower-paid jobs have translated to much smaller super nest eggs than men of the same age.



“Many of us, particularly women of my age, stayed home with our children… there wasn't superannuation and also wages have always been less for women,” Bev noted of her cohort’s experience.

Indeed, on average, women retire with balances drastically lower than men – roughly a 42% gap in super savings between men and women approaching retirement, according to the Workplace Gender Equality Agency.

That means a lot of single older women, in particular, rely heavily on the Age Pension and whatever income they can scrape together. It’s no coincidence that women over 55 are among the fastest-growing groups at risk of homelessness in Australia, as rising rents and inadequate savings collide.

Even retirees who did everything “right” – paid off a home, saved what they could – have been hit by economic curveballs. In the past few years, we’ve seen spikes in inflation and interest rates. Retiree household living costs jumped sharply (though there was a small relief in late 2024), and things like medical expenses or home insurance for older people can be steep.

It’s not surprising that some retirees look for a bit of paid work to buffer against these pressures. A part-time wage can make the difference between just surviving and feeling comfortable. One might say working becomes a financial safety valve for pensioners: it lets them handle unexpected bills (like a car repair or big electricity bill) without panic.

But it’s not all about the dollars. There’s also something to be said for staying engaged. Many seniors actually want to keep a foot in the workforce because they enjoy the routine or the social aspect. Maybe they love mentoring younger colleagues, or they’ve turned a lifelong hobby into a little business at the markets. The Retirement Essentials report we’re expanding on noted reasons like personal enjoyment and social connection, not just cash, driving older Australians to keep working. As the CEO of one super fund put it, “retirement is different for everyone” – for some, it’s a fluid transition rather than a hard stop.

A bit of casual work here and there can actually boost confidence and mental well-being in one’s later years. It gives a sense of contribution and keeps skills sharp. Indeed, there’s a positive story here: Australians in their 60s and 70s today are generally more active and capable than stereotypes would have us believe.

All that said, if continuing to work were purely an easy choice, we’d likely see more people doing it. This brings us to the realities of the system and its impact on real lives.

Making It Work: Real-Life Implications and Dilemmas​

For those who do choose to work while on the Age Pension, there are some common dilemmas and experiences shared by many.

One issue is the balancing act between earning extra income and keeping your pension (and related benefits). Thanks to the Work Bonus, as we discussed, you can earn a fair bit in short bursts without losing pension income.

But if you earn too much for too long, the pension will taper down or pause. Some pensioners describe this as a disincentive to work more, because they feel they’re “punished” for earning.

In fact, only about 3% of Age Pensioners currently report any employment income at all. That’s a tiny fraction – out of 2.6 million age pensioners, only ~84,000 had income from work in a recent count.

It suggests most either don’t want to work or perhaps more likely can’t or won’t under the present settings. By comparison, in New Zealand – which has a more liberal system – over 26% of over-65s are employed.



Take the example of someone who does some regular part-time work. Bev’s story (mentioned earlier) is instructive: she works a few days a week and enjoys it, but she has to watch her hours. “I would definitely like to earn more,” she said, “but I’ve been in situations where my pension has been cut so much that my income doesn’t really increase as much as it should.”

In other words, for every extra dollar she earned past the limit, she lost 50 cents of pension, so it hardly felt worth the effort.

She’s not alone in feeling that way. The effective income “tax” (through pension reduction plus actual tax on wages) can be quite high.

One analysis found that a pensioner who earns enough to go over the Work Bonus limit might only keep around 30¢ of each extra $1 they earn once the pension reduction and taxes are factored in. That’s a big dent – and it leads some to conclude that it’s not worth working those additional hours.

Another real-world consideration is reporting and red tape. To get the Age Pension, you must report your income (and any changes in your circumstances) to Centrelink, typically on a fortnightly basis if you have variable earnings. For retirees who haven’t dealt with Centrelink’s reporting requirements before, this can be daunting.



Many have heard horror stories of long call centre wait times, complex paperwork, or even being hit with an overpayment debt due to a reporting mishap.

One retiree bluntly described the process: “You’ve got to continue to report your income situation to Centrelink on an ongoing basis, which is incredibly challenging. It’s a very difficult system to navigate.” This sentiment is common – the bureaucratic hassle factor.

For someone who might take on a casual job here and there, the idea of having to constantly update Centrelink and ensure everything is correct can be enough to say “too hard, I won’t bother.” After decades of working, a lot of seniors just aren’t keen to take on a new stressful admin burden in exchange for a bit of pocket money.

There’s also the emotional side: fear of losing the safety net. Even though rules now allow a two-year pause and easy restart of the pension if you earn too much, many pensioners remain wary.

The thought of inadvertently breaching the rules and having their payments cut off – or losing their Pensioner Concession Card benefits – creates anxiety. It’s one reason the government extended the concession card retention period for those who dip back into work. But that fear factor doesn’t disappear overnight.

Furthermore, while this editorial focuses on policy, we mustn’t ignore a simple reality: finding suitable work as an older person can be challenging. Age discrimination in hiring is real – some seniors report sending out CVs endlessly or being passed over because of assumptions about their age.



“No one wants to employ me at my age,” as one 71-year-old frankly lamented on an ABC program. Health issues or physical limitations can also limit what jobs are feasible. So even if the rules allow you to earn, the opportunities to do so may be limited.

Many older Australians end up in casual or low-paid roles if they do find work – which might be fine or even enjoyable, but it’s worth noting as part of the real-world landscape.

To illustrate the push-and-pull, consider Gary’s scenario (based on a real Retirement Essentials member story). Gary is on a part pension and picks up seasonal work at a holiday park during busy periods.

In some fortnights he earns about $1,100. With his accrued Work Bonus and the $300 fortnightly offset, a big chunk of that is ignored by Centrelink, and he still gets most of his pension payment in those fortnights. When the work dries up, his pension bounces back to normal.

For Gary, the system works as intended – it smooths out the impact of fluctuating work income. Now contrast that with Kerry’s story: she works a steady casual job earning $700 each fortnight. Every fortnight, the first $300 is exempt but the remaining $400 counts as income and trims down her pension a bit.

Kerry’s fine with that – she likes the job – but she notices the reduction. If she were to double her hours, her pension reduction would also grow, potentially to the point of nil pension if she earned enough.

That is the knife-edge many working pensioners are conscious of: work too little and you might struggle financially; work too much and the pension might vanish (at least temporarily).

The Policy Debate: Stuck in First Gear?​

The experience of people like Bev, Gary, and Kerry has not gone unnoticed. There’s been a lot of talk in recent years about whether Australia should overhaul how it handles work for pensioners.

During the 2022 Jobs Summit and beyond, proposals floated around to let age pensioners work more without penalty, especially as industries faced worker shortages.

Advocates like National Seniors and the Actuaries Institute have suggested ideas ranging from further raising the Work Bonus, to doubling the income free area, to more radical calls for a universal age pension (like New Zealand’s) where everyone of age gets it and any additional income is simply taxed normally.

It’s easy to see the appeal of a simpler system. New Zealand’s approach means Kiwi pensioners don’t have to think twice about taking a job – their pension stays intact and only normal income tax applies.

Not surprisingly, New Zealand has nearly double the proportion of seniors in the workforce compared to Australia. National Seniors Australia argues that removing earning penalties would not only improve older Aussies’ finances but also help the broader economy by bringing experienced workers back in.

They even commissioned modelling that suggests if roughly 8% of pensioners chose to work or work more, a full income exemption could pay for itself through taxes and reduced welfare reliance. It’s a compelling argument: with low unemployment and many industries (like aged care, retail, and hospitality) desperate for staff, why not tap into the reliable, skilled over-65 workforce?

On the other hand, there are big-picture concerns. The Age Pension is means-tested for a reason – it’s designed to target support to those who need it most. Some experts and policymakers worry that making it too easy to draw a pension and a full salary could strain the budget or be seen as unfair. Australia’s pension system is often praised internationally for being sustainable precisely because it is targeted.

A universal pension (where a millionaire and a low-income retiree alike get the same government payment) would cost billions more and might necessitate higher taxes or cuts elsewhere.

Others suggest a middle ground: keep the means test but simplify it, perhaps by raising the income limits further or streamlining reporting, so that the disincentives aren’t so sharp.

For example, rather than a hard 50% taper, some propose a more gradual phase-out or a higher initial free area. There’s also the viewpoint that any extra support for working pensioners should not overshadow those who can’t work (due to disability, full-time caregiving duties, etc.) – we don’t want to penalise seniors who truly can’t earn on the side.

As of now, the federal government has taken incremental steps but shied away from dramatic reform. The permanent expansion of the Work Bonus in 2023 was one such step. It means an Aussie pensioner can earn around $227 a week from work (roughly $11,800 a year) without seeing any pension cut – up from about $150 a week before.

That change was welcomed, but critics call it “underwhelming”, pointing out it’s still a low ceiling if someone wanted, say, a half-time job. The latest data shows it hasn’t led to a stampede of pensioners back into work – only a small uptick in workforce participation so far.

In the lead-up to the next election, there’s chatter about this issue, but no party has embraced a New Zealand-style solution yet. It may simply be politically and fiscally hard to do big changes quickly. In the meantime, we have what we have: a somewhat convoluted system that tries to encourage seniors to work a bit, but not too much.

The Bottom Line​

So, where does all this leave the average Aussie aged 60+ who’s reading this and wondering about their own situation? In plain language: yes, you can work and still get the Age Pension. The rules are there to support you up to a point, and many people are already taking advantage of that. Working in retirement doesn’t mean giving up your pension – especially if your work is casual or part-time.

The Work Bonus acts as a cushion, letting you earn a modest amount without any hit to your payments. It’s also not a one-off or limited-time thing; it accumulates and carries on each year, so you have flexibility. And importantly, even if you do earn enough to reduce your pension, you’re not doing anything wrong – in fact, you might find you’re still better off overall with the extra income (and possibly enjoying the intangible benefits of working).

However, it’s equally true that the system can feel complex and frustrating. Between juggling income reporting, understanding the thresholds, and the psychological effect of seeing your pension drop as you earn, it’s no wonder a lot of seniors either throw their hands up or carefully limit how much they work. As we’ve discussed, many are justifiably cautious.

The cost-of-living pressures are real – some older Australians are facing tough choices like cutting back on heating or downsizing their homes to make ends meet. Every bit of income helps, and ideally the system should make that easier, not harder.

One thing to remember is that help is available. Centrelink does have information services and even financial information service officers who can explain your specific situation. Community organizations and services like Retirement Essentials (the source of the article we’ve been expanding upon) offer guidance to navigate these rules.

Sometimes just running the numbers with a knowledgeable person can reassure you that, yes, taking that one-day-a-week job at the local library won’t suddenly cut off your pension – you’ll just need to report the income and maybe see a small reduction if you earn above the free threshold.

Many seniors find that once they understand the Work Bonus and get into the rhythm of fortnightly reporting (which can be done online fairly easily), the process becomes less intimidating.

Lastly, it’s worth noting that this is an evolving area. As Australia’s population ages and more people move into retirement with varied financial situations, the question of how much you can (or should) work while on the pension will keep coming up.

Policymakers are hearing from seniors (loudly, through groups like National Seniors) that the desire is there to contribute and earn without jumping through excessive hoops or being unduly penalised.

There’s a social question here too: what is retirement supposed to be? Should it be a hard line where work is over, or a flexible phase of life where some work is fine? Many baby boomers are redefining retirement as a mix of leisure, family time, and a bit of paid or volunteer work. The system may eventually catch up with that reality.

To wrap up, if you’re an older Australian contemplating work on the Age Pension, inform yourself of the rules, maybe talk to a professional, and weigh the pros and cons for your life. You might find that a little work can greatly enhance your financial comfort and day-to-day satisfaction – or you might decide it’s not worth the hassle. Either choice is okay, and you’ve earned the right to make it.

So, what do you think? With Australia needing skilled workers and so many over-60s feeling cost-of-living strain, should we make it easier for pensioners to work, or does the system have it about right by focusing on those most in need? It’s a question worth pondering as we navigate the future of retirement.