The Player Level is basically the measurement of your progress in the game. You can earn XP by doing actions, and once earned XP reaches a certain amount, you get your level up. You can check Player Level and required XP to reach next level at the top left-hand corner. SimCash and unlocked objects, locations, and so on are rewards for leveling up.
Ways to earn XP
Do Some Action!
By tapping a some objects, you will be asked to do an action. You can check what you will spend for it and how many XP you can earn.
Go to Work
Aside from the Simoleons and Career XP you'll receive from doing your job, you'll also get some Level XP.
Do your Hobby
Performing your Hobby is not just for fun. There are lots of rewards whenever you completed a Hobby Events. One of these rewards is Level XP. The higher your Hobby Level, the more XP you'll get.
Interacting and socializing with other Sims around you is also rewarding. Aside from establishing your relationship with them, you'll also get Level XP.
Attend A Party
Attending parties are not just good in socializing with other players, but also helps in improving your Sims' level. Your Sim's hobby or career can also contribute in some party.
Participating in Events
Special Events normally held outside your home and workplace. It is time consuming, but it's worth a try. Aside from XPs and Simoleons, you can also receive variety of Tickets
Recharge your Energy
You can also get a small number of Level XP whenever you recharge your Energy. Just a reminder, there is a limitation in using these recharge objects per day.
How to Level up Faster
Complete Daily To Do List
Completing your Daily To Do List is one way to speed up your levelling. A number of tasks are assigned each day, and you can earn a total of 120 XP and a cupcake. There is no penalty even if you miss them. Aside from XP, you can also receive Simoleons, Tickets, and Fashion Gem.
Unlock Retirement & Heirlooms Retirement is not always the end of everything for a Sim. He/She can still be around and mentor family members. To commemorate your Sim's retirement, he/she will give you a Heirloom that unlocks certain trait, level or hobby.
Not sure if this helps but if you accidentally retire them in their work outfit, just have another sim hang out with them and have them do something together (watch tv, dance, etc) and they should change into their regular clothes!