How part-time work affects your Age Pension, and why accessing home equity could offer another way to supplement your retirement income.
For many older Australians, retirement doesn’t necessarily mean giving up work altogether.
Some people enjoy the social connections, routine and sense of purpose that part-time employment provides. Others return to work for a more practical reason: their Age Pension and retirement savings simply aren’t stretching far enough.
But here’s something that catches many retirees by surprise.
Earning extra money from part-time work can sometimes reduce the Age Pension you receive from Centrelink.
While the government’s Work Bonus scheme helps pensioners keep more of their earnings, there’s a limit to how much employment income can be excluded from the pension income test.
So, is working longer always the best way to improve your retirement finances?
For homeowners aged 60 and over, there’s another option worth considering: accessing some of the wealth already accumulated in your home through a reverse mortgage.
Let’s explore how these options compare, and what you should understand before making a decision.
What Is the Centrelink Work Bonus?
The Centrelink Work Bonus is designed to encourage older Australians to remain in the workforce without immediately losing part of their pension.
Under the rules applying in November 2026, eligible pensioners can earn $300 per fortnight from work before that employment income is counted under the Age Pension income test.
This is in addition to the normal pension income-free area.
The Work Bonus applies automatically to eligible pensioners. You don’t need to apply separately, although you must report your employment income to Centrelink.
It can apply to wages and certain self-employment income earned through active work.
Importantly, the Work Bonus is not an extra payment from Centrelink. It simply reduces the amount of employment income counted when calculating your pension.
Source: Services Australia — How the Work Bonus Works
The Work Bonus Trap: When Extra Work Starts Affecting Your Pension
The Work Bonus can be valuable, but there’s a common misunderstanding.
Some retirees assume that because they qualify for the Work Bonus, they can work as many hours as they like without affecting their pension.
That’s not necessarily the case.
Consider a hypothetical retiree named Margaret.
Margaret is 69, owns her home outright and receives the Age Pension. She’s considering returning to work for two days a week to help cover her rising household expenses.
Her employer offers her $800 per fortnight.
Here’s how the Work Bonus could apply.
| Margaret’s earnings | Fortnightly amount |
| Gross employment income | $800 |
| Standard Work Bonus deduction | −$300 |
| Employment income remaining | $500 |
| Additional Work Bonus balance available | Depends on her accumulated balance |
| Income potentially subject to the pension income test | Up to $500 |
If Margaret has enough accumulated Work Bonus credits, these could offset the remaining $500.
But once her available credits are exhausted, some or all of that $500 may count towards the pension income test.
Whether her pension actually reduces will depend on her other assessable income, the income-free area, her partner’s circumstances (if applicable) and the assets test.
The important point is that earning $800 doesn’t automatically mean Margaret is $800 better off each fortnight.
Any pension reduction, income tax or work-related expenses may reduce the additional amount she has available to spend.
This doesn’t mean working is a bad financial decision. It simply means retirees should understand their overall position rather than looking at employment income in isolation.
A Little-Known Feature: You Can Accumulate Work Bonus Credits
Here’s some good news that many pensioners may not realise.
If you don’t work, or earn less than $300 per fortnight in eligible employment income, your unused Work Bonus can accumulate.
The maximum balance is currently $11,800.
Eligible new pension recipients can also receive an initial $4,000 Work Bonus balance, subject to the scheme’s rules.
This can be particularly useful for people who work seasonally or return to work after a long break.
For example, a retiree who hasn’t worked for some time may have accumulated enough credits to offset a substantial amount of employment income before it affects their pension.
However, those credits are gradually used up when earnings exceed the standard $300 fortnightly deduction.
That’s why it’s worth checking your available Work Bonus balance before accepting additional work.
You can check your balance through your Centrelink online account linked to myGov.
Source: Services Australia — Work Bonus Balance
What If You Need More Money but Don’t Want to Keep Working?
For some Australians, part-time work is a welcome part of retirement.
For others, it’s becoming a financial necessity.
Perhaps you’re in your late 60s or early 70s and would prefer to spend more time with your grandchildren, travel or simply enjoy a slower pace of life.
But rising costs for groceries, insurance, electricity and healthcare are making that difficult.
Now consider another common situation.
You own a home worth $1 million or more, with little or no mortgage remaining.
You’ve spent decades building equity in your property, but most of that wealth is tied up in bricks and mortar.
Meanwhile, you may be working extra hours just to cover everyday expenses.
Could accessing some of your home equity offer another way to supplement your retirement income?
For some older homeowners, the answer may be yes.
How a Reverse Mortgage Can Supplement Your Age Pension
A reverse mortgage is a specialist home loan generally available to eligible homeowners aged 60 and over, with some lenders offering options from age 55.
It allows you to borrow against part of your home’s value while continuing to own and live in the property.
Unlike a conventional home loan, a reverse mortgage generally doesn’t require regular repayments while you continue to meet the loan conditions.
Instead, interest and fees are added to the loan balance.
The debt is typically repaid when the property is sold, you permanently move out or your estate is settled.
Depending on the lender and product, funds may be available through:
- A lump sum: A single payment for a particular expense.
- Regular advances: Payments designed to supplement retirement cash flow.
- A line of credit or cash reserve: An approved borrowing facility that allows you to draw funds when needed, subject to the loan terms.
The important difference is that a reverse mortgage provides borrowed funds, rather than income earned through employment.
That distinction can have implications for Centrelink.
Learn more about reverse mortgages and how they work.
Does a Reverse Mortgage Affect Your Age Pension?
This is one of the most important questions for any retiree considering home equity release.
The short answer is: a reverse mortgage doesn’t automatically reduce your Age Pension, but how you access and use the money matters.
Under Australian social security rules, genuine loan proceeds are generally not treated as income.
This means borrowing money through a reverse mortgage is treated differently from receiving wages from part-time employment.
However, Centrelink also assesses assets and certain income generated from financial assets.
Here’s how different situations may be treated.
| How reverse mortgage funds are used | Potential Centrelink treatment |
| Funds approved but not yet drawn from a genuine line of credit | Generally not counted as income or assets |
| Funds withdrawn and spent on ordinary living expenses | Loan proceeds generally aren’t income; usually no ongoing asset remains from the amount spent |
| Funds withdrawn and retained in a bank account | Generally assessed as a financial asset, with deeming rules applying |
| Funds used for eligible improvements to your principal home | The principal home is generally exempt from the assets test |
| Funds used to purchase investments | The investments may count towards income and assets tests |
| Funds gifted to children or family | Centrelink gifting rules may apply |
This is a general summary. The treatment of particular loan structures and uses of funds can differ. Seek confirmation from Services Australia before proceeding.
You can find further information in our existing guide:
How Does a Reverse Mortgage Affect Your Age Pension? — Seniors First
Why a reverse mortgage cash reserve can be particularly useful
One reverse mortgage feature worth understanding is the line of credit, sometimes called a cash reserve.
Instead of borrowing a large lump sum and depositing the money into your bank account, you may be able to establish an approved facility and withdraw smaller amounts when required.
For example, you might have access to a $50,000 borrowing facility but initially withdraw only $5,000 for an unexpected expense.
Generally, undrawn funds in a genuine reverse mortgage line of credit aren’t assessed as an asset by Centrelink.
And with many line-of-credit products, interest is charged only on amounts actually drawn, rather than the entire approved facility.
However, lender terms vary, and some products may have different rules regarding available credit, fees and interest.
This approach can provide flexibility and may help limit unnecessary borrowing.
It does not guarantee that your pension will remain unchanged, particularly if drawn funds are retained or invested.
Working Part-Time vs Accessing Home Equity: What’s the Difference?
For retirees looking for additional spending money, it’s worth comparing the two approaches.
| Feature | Working part-time | Reverse mortgage |
| Provides extra money | Yes, through employment earnings | Yes, through borrowed home equity |
| May affect Age Pension | Yes, depending on income, Work Bonus and other circumstances | Yes, depending on how borrowed funds are held or used |
| Requires regular employment | Yes | No |
| Creates a loan debt | No | Yes |
| Interest charges | None | Generally compound over time |
| Can provide social engagement | Often | Not directly |
| Reduces future home equity | Not directly | Yes, as the loan balance grows |
| Requires homeownership | No | Yes, with sufficient eligible equity |
Neither option is automatically better.
Working can provide income without taking on debt and may offer important physical, mental and social benefits.
A reverse mortgage may provide financial flexibility without the need to work, but it comes with borrowing costs and reduces the equity remaining in your property.
Some retirees may find that combining a small amount of part-time work with carefully managed home equity is more suitable than relying entirely on one source.
Example: A Retiree Who Wants to Cut Back Her Working Hours
Let’s return to Margaret.
At 69, she’s still working two days a week, primarily because she needs additional income to feel financially comfortable.
She owns her home outright, worth approximately $1.2 million.
She enjoys some aspects of her job but would prefer to work fewer hours.
After reviewing her situation, Margaret considers whether a modest reverse mortgage could give her more flexibility.
Instead of continuing with two days of work each week, she might choose to work one day and use occasional home equity withdrawals to help cover larger expenses.
The potential benefits include more free time, less pressure to earn additional wages and the ability to remain in her own home.
However, Margaret would also need to consider:
- The interest accumulating on any borrowed funds.
- The impact on her future property equity and estate.
- Whether she may need money for home care or residential aged care.
- The effect of her remaining employment earnings on her pension.
- The Centrelink treatment of any reverse mortgage funds she withdraws.
- Whether other options could meet her needs at a lower cost.
This isn’t about borrowing the maximum amount available.
It’s about understanding whether accessing a relatively modest portion of existing home equity could help Margaret achieve the retirement lifestyle she wants.
What About the Government’s Home Equity Access Scheme?
There’s another option worth considering.
The Australian Government offers the Home Equity Access Scheme (HEAS), a government-backed loan that allows eligible older Australians to access equity in Australian real estate.
Like a commercial reverse mortgage, HEAS is a loan rather than an additional pension entitlement.
Eligible participants can receive fortnightly loan payments and, within scheme limits, lump sum advances.
The loan balance accrues compound interest and is generally repaid when the secured property is sold or from the estate.
HEAS participation does not itself change someone’s existing income support entitlement.
However, the scheme has different borrowing limits, payment structures and eligibility requirements from commercial reverse mortgages.
A useful comparison should consider the interest rate, flexibility, amount available and long-term borrowing costs.
Learn more about the Home Equity Access Scheme — Services Australia
Five Things to Check Before Working More Hours or Accessing Home Equity
If you’re trying to improve your retirement cash flow, consider these five steps before making changes.
- Check your Work Bonus balance. You may have accumulated credits that allow you to earn more employment income without immediately reducing your pension.
- Understand your Centrelink income and assets tests. Your pension depends on your overall financial position, not simply the number of hours you work.
- Consider how much additional money you actually need. A relatively modest increase in retirement cash flow may make a meaningful difference. There’s no need to borrow more than necessary.
- Compare borrowing costs with the benefits of additional income. A reverse mortgage involves compound interest and can reduce the value of your estate. Ask for long-term projections before making a decision.
- Get independent information about Centrelink and your financial position. Services Australia’s Financial Information Service (FIS) can explain how financial decisions may affect your government payments. An appropriately qualified financial adviser can also help you assess your broader retirement needs.
The Bigger Question: Should You Have to Keep Working to Enjoy Retirement?
Australia’s retirement landscape is changing.
Many older Australians are living longer, facing higher household expenses and finding that their Age Pension and superannuation don’t provide the lifestyle they expected.
For some, working longer is a positive choice.
For others, it can feel as though retirement keeps getting pushed further away.
Yet many of these same Australians have accumulated substantial wealth in their family homes.
A reverse mortgage won’t be right for everyone, and accessing home equity always involves important trade-offs.
But the growing range of later-life lending options means that working more hours or selling the family home aren’t necessarily the only choices available.
Retirement should be about having options — and understanding how your home equity, Age Pension, superannuation and employment income can work together is an important part of making an informed choice.
Explore Your Retirement Income Options With Seniors First
At Seniors First, we’ve been helping older Australians understand reverse mortgages and later-life lending since 2006.
Our specialist brokers can explain how much home equity you may be eligible to access, compare reverse mortgage options from different lenders and help you understand the potential costs and risks.
If you’re working part-time because your retirement income isn’t stretching far enough, it may be worth exploring whether home equity could provide additional flexibility.
You don’t necessarily have to sell your home to access some of the wealth you’ve built up over a lifetime.
Important information: This article provides general information only and does not constitute personal financial, taxation or Centrelink advice. Reverse mortgages are loans that accrue interest and may reduce the equity remaining in your home. Accessing borrowed funds may affect Age Pension entitlements depending on how the money is held or used. Always confirm your individual circumstances with Services Australia and seek appropriate independent advice before making financial decisions.
Centrelink rules and figures referenced in this article are current as at November 2026 and may change.
