Last Tuesday, I sat across from Margaret, 63, at a cafe on Darling Street.
She’d just finished her last day at the inner west council after 28 years. Retirement officially started Monday.
“I’m thinking of picking up some part-time work,” she said. “Two days a week, maybe admin or bookkeeping. Just to keep busy.”
Then she paused.
“Is that weird? Am I supposed to just… stop working completely?”
It’s a question I hear constantly from Balmain locals who are about to retire or who’ve just retired.
Should I work part-time in retirement?
And the honest answer is: It depends on why you’re asking.
Let me explain.
When someone tells me they’re considering part-time work in retirement, I always ask the same question:
“Why?”
Because there are really only two reasons:
Both are completely valid. But they require completely different approaches.
Let’s tackle them separately.
This is the most common reason, even if people don’t always admit it upfront.
The math doesn’t quite work. Your super generates $38,000/year, you get a part Age Pension of $14,000/year, but you need $58,000/year to live comfortably.
Gap: $6,000/year.
Working part-time is one way to close that gap.
But here’s the question most people don’t ask:
Is part-time work the BEST way to close that gap?
Sometimes yes. Sometimes no.
Let’s say you work two days per week at $35/hour (about right for admin/bookkeeping/consulting in the inner west).
2 days × 7.6 hours × $35 = $532/week
× 48 weeks (allowing 4 weeks off) = $25,536/year
Sounds great, right?
But here’s what actually happens after tax and Age Pension adjustments:
Gross income from work: $25,536
Tax (at your marginal rate): ~$3,830
Age Pension reduction: ~$6,400 (income test)
Net benefit: ~$15,300/year
“Retirement Income vs Lump Sum”
You’re working 730 hours per year for an effective rate of about $21/hour, not $35/hour.
Still worthwhile? Maybe.
But you need to be honest about the real numbers, not the gross numbers.
Here are some realistic Balmain scenarios:
2 days/week, $35/hour
Gross annual income: $25,536
After tax and Age Pension reduction: ~$15,300/year
Effective hourly rate: $21/hour
Hours committed: 730/year
3 days/week, $28/hour
Gross annual income: $32,256
After tax and Age Pension reduction: ~$18,200/year
Effective hourly rate: $16.60/hour
Hours committed: 1,095/year
1 day/week, $85/hour (specialist knowledge)
Gross annual income: $32,680
After tax and Age Pension reduction: ~$19,800/year
Effective hourly rate: $54/hour
Hours committed: 365/year
“What $600,000 in Super Actually Buys You”
Notice the pattern?
Higher hourly rates and fewer hours = better net outcome.
If you NEED to work for the money, consulting or specialist work one day per week beats retail work three days per week – both financially and lifestyle-wise.
Here’s what catches most people off guard:
Every dollar you earn from work reduces your Age Pension by 50 cents (after the first $300/fortnight Work Bonus threshold).
This is called the income test, and it dramatically changes the math of part-time work.
Example:
You earn $25,000/year from part-time work.
Threshold (Work Bonus): $7,800/year protected
Excess income: $17,200
Age Pension reduction: $17,200 × 50% = $8,600/year
Your Age Pension drops from, say, $20,000/year to $11,400/year.
So your $25,000 in work income only adds $16,400 to your total retirement income.
You’re not gaining $25,000. You’re gaining $16,400.
Big difference.
“How the Age Pension Actually Works”
This doesn’t mean part-time work isn’t worth it. But it means you need to calculate the real benefit, not the imaginary benefit.
Part-time work makes clear financial sense when:
✓ You have a meaningful income gap (more than $5,000/year)
✓ You can command decent hourly rates ($40+/hour)
✓ You can work limited hours (1-2 days/week max)
✓ Your Age Pension isn’t heavily impacted (or you’re not eligible anyway)
✓ The net benefit is worth the time commitment
Real example from Balmain:
David, 64, financial services background. Picks up contract CFO work for small businesses – one day per week at $120/hour.
Gross: $45,000/year (roughly)
Net after tax and pension reduction: $28,000/year
Effective rate: $75/hour
Worth it? Absolutely. He’s adding meaningful income while working just 50 days per year.
Compare that to someone working three days per week in retail for a net gain of $18,000/year while losing 1,095 hours.
Very different value propositions.
Now let’s talk about the other reason people work part-time in retirement.
Not because they need the money, but because they need the structure.
This is equally valid – maybe more valid – but it requires a completely different lens.
I’ve seen plenty of Balmain retirees with perfectly adequate super balances ($700k+, generating plenty of income) who go back to part-time work within six months of retiring.
Not because of money. Because of boredom.
Or loneliness.
Or lack of purpose.
Or because their partner told them to “get out of the house.”
Fair enough.
But here’s the trap: If you’re working part-time for non-financial reasons, you need to be honest about it.
Don’t tell yourself “I’m doing this for the extra income” when you’re really doing it because you don’t know what else to do with your time.
Why does this matter?
Because if you’re working for structure/purpose/social connection, there are probably better ways to get those things than working two days per week at Bunnings.
If you’re working part-time primarily for non-financial reasons, consider these alternatives:
Volunteer work: Same structure, social connection, and purpose – but you choose work you actually care about instead of whoever will hire you.
Hobbies with commitment: Join a lawn bowls club, take art classes, learn Italian. Same regular schedule, more enjoyable.
Board positions: Many local nonprofits need skilled board members. You get to use your expertise without the grind of regular employment.
Project-based work: Help a friend’s business during busy season, mentor someone in your field, write that book you’ve always talked about.
All of these provide structure and purpose. None of them come with a boss, mandatory hours, or the stress of being back in the workforce.
I hear this one a lot:
“I’ll work part-time to keep my mind sharp.”
Look, I get it. But working two days per week at a job you don’t particularly care about isn’t keeping your mind sharp.
Reading challenging books keeps your mind sharp.
Learning new skills keeps your mind sharp.
Having interesting conversations keeps your mind sharp.
Travelling keeps your mind sharp.
Doing data entry because you’re worried about cognitive decline? That’s not keeping your mind sharp. That’s just making you tired.
Be honest about what you’re really after.
Here’s the uncomfortable truth:
A lot of people work part-time in retirement because they haven’t figured out how to retire.
They’ve spent 40 years with their identity tied to work.
Their social circle is work.
Their routine is work.
Their sense of worth is work.
And suddenly that’s gone.
Part-time work becomes a safety net. A way to ease into retirement without fully committing.
Again, totally valid. There’s no rule that says you have to retire cold turkey.
But if this is you, be intentional about it.
Don’t drift into part-time work by default. Choose it consciously, with a clear understanding of what you’re gaining and what you’re giving up.
Part-time work is probably NOT worth it when:
✗ You’re doing it out of vague anxiety about money (calculate the actual gap first)
✗ You’re working low-wage hours that barely move the needle after tax/pension adjustments
✗ You’re sacrificing things you’d rather do (travel, grandkids, hobbies) for marginal income
✗ You haven’t actually tried full retirement yet – you’re pre-emptively filling time
✗ Your partner is asking you to “get out of the house” (maybe address that issue directly)
Jenny, 62, graphic designer. Retired from full-time agency work but kept three clients on retainer.
Works from home, 6-8 hours per week, $90/hour.
Gross income: ~$42,000/year
Net after tax/pension: ~$26,000/year
Time commitment: Flexible, about 300 hours/year
She uses the income to fund a month-long trip to Italy every year. Without the part-time work, the Italy trip would eat into her super withdrawals uncomfortably.
Worth it? Absolutely. High rate, low hours, clear purpose.
Michael, 65, former project manager. “Retired” but picked up contract work at a mate’s construction company within three months.
Works 2-3 days/week (irregular), $45/hour.
Gross income: ~$28,000/year
Net after tax/pension: ~$16,800/year
Time commitment: About 600 hours/year
When I asked him why, he shrugged. “Keeps me busy.”
The problem? He’d been talking about finally doing the Coast to Coast walk in New Zealand for 20 years. Still hasn’t done it because “work keeps coming up.”
Worth it? Probably not. He’s working out of habit, not intention.
Patricia, 64, teacher. Went from full-time (5 days) to 2 days per week for two years as a transition into full retirement.
This worked beautifully. She got to ease out of work, keep some income flowing while her super balance grew, and gradually build up her non-work identity.
At 66, she stopped completely – and was ready.
Worth it? Definitely. Part-time work as a bridge, not a permanent state.
Here’s a simple framework:
Income needed: $______/year
Income from super: $______/year
Income from Age Pension: $______/year
Gap: $______/year
If the gap is less than $5,000/year, you probably don’t need to work. Make small lifestyle adjustments instead.
If the gap is $10,000+/year, part-time work might make sense – but also look at optimizing your super for better income generation first.
Gross income from work: $______
Minus tax: $______
Minus Age Pension reduction: $______
Net benefit: $______
Effective hourly rate: Net benefit ÷ hours worked = $______/hour
Is that rate worth it to you?
Am I working because I genuinely enjoy this work?
Am I working because I haven’t figured out what else to do?
Am I working out of fear rather than desire?
What am I giving up by committing to regular work hours?
Answer those honestly.
Don’t drift into part-time work.
Don’t keep working just because stopping feels scary.
Choose it consciously – for clear reasons – or don’t do it at all.
Should you work part-time in retirement?
Maybe. But only if:
Part-time work isn’t a default. It’s a choice.
And like all retirement choices, it should be made intentionally, with clear eyes about what you’re gaining and what you’re giving up.
If you’re working two days per week for a net gain of $12,000/year while missing out on the things you actually want to do in retirement?
That’s not a win. That’s a trap.
But if you’re working one day per week doing something you enjoy, earning good money, and it’s funding experiences you otherwise couldn’t afford?
That’s brilliant. Keep doing it.
The key is knowing which category you’re in.
Stop guessing whether you need to work part-time in retirement.
The One Page Financial Plan shows you exactly:
✓ Your actual income gap (if any)
✓ What part-time work would really add (after tax and Age Pension adjustments)
✓ Whether you can afford to fully retire now
✓ Alternative strategies that might work better than part-time employment
For $660 (inc GST), you’ll know whether part-time work makes sense for your situation – or whether you’re already in a position to retire fully.
📧 Email: adam@suncow.com.au
📞 Phone: 0418 785 200
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