Deferring Pension.

[furrypusscat]

I could have taken my state pension 3 years ago but decided to defer it. I have now made the decision to start taking my pension and now have a net amount of just over £17000 if I take as a lump sum or if I wanted it adding to my weekly pension it would be around £44 extra for the rest of my life. What are your views on this, has anyone had to make a similar decision. It is difficult to know the best way forward with interest rates as they are. I am a standard rate tax payer as I have 2 small private pensions.

[Old_Geezer]

how long do you plan to live for ?

I think the average is in the upper seventies these days.

£17,000 invested at, say 5%, is £850 pa (£70 a month, £16 a week) and you keep the £17,000 (taking inflation into account it'll be worth less than today) to leave to your grandchildren. You can compare that to the £44 you quoted.

Unsure there is a clear answer. You takes your money and makes your choice. And if after you die you decide it was the wrong decision, you can come back and haunt all those who gave you bad advice.

[oldbillbuck]

Would like to know who is paying 5% interest these days OG

[SlackAlice]

I'd agree the present savings rates are rubbish and makes it difficult to decide.

However, with the best will in the world you have no idea when your numbers up, you might drop dead or have a fatal accident tomorrow. With that in mind I'd take the money now and enjoy it.

Sorry to be so glum ☺☺☺

[furrypusscat]

Thank you. We have no family so money left after both dying will be left to chosen charities. What accounts pay 5%, I tend to be a safe investor and tend to stick to High Street banks/building societies using Isas to avoid tax issues. It is difficult to know which way is best. Life expectancy for females seems to be around 83 years of age, I am almost 64, non smoker and in reasonably good health.

[bert_h]

I didn't even think about it. If you take the weekly increase, and live a long time, then you win twice over. If you take the lump sum, you only win if you die early . . . eh? just run that past me again, please?

[Sipowicz]

:-)

[grasscarp]

Do you have any premium bonds? You could put it in there and may win sometimes and it is always there if you need it. You can get it out very quickly.

[Old_Geezer]

I picked %5 as a fairly garbage rate that anyone would be ashamed to offer and presumably might be the average over the next decade or so. If you know better or worse, feel free to make your own calculations. But I suspect the finance sites can give you best present rates.

[Old_Geezer]

Your estate wins, bert. On the other hand you get to heaven quicker so may have won also.

[237SJ]

Everybody has different priorities but unless I needed the £17000 for house repairs or I had always harboured dreams of a once in a lifetime holiday (or maybe desperately need a new car and can`t afford one) I`d take the £44 pw. The income will always be there for you but once the lump sum`s gone, it`s gone. Interest rates are dire as well.

[furrypusscat]

Had to leave the site for a while but back now. I had thought of that bert and don't need the cash.
I have a few premium bonds and I agree there is a slim chance of winning, the money is always there and as you say grasscarp can easily be withdrawn. Oh what a difficult decision I have to make. I do have 3 months to consider so I am going to have a good think about the pros and cons. No-one can make that decision for me but thank you all for your thoughts and suggestions.

[furrypusscat]

I wouldn't class us a well off but are comfortable and do have a certain amount for such as a new roof, boiler etc if it becomes necessary. We keep up to date with new car and don't go on lavish holidays so wouldn't need the cash. OH thinks the higher pension might be better. Of course that amount will be taxed but will only ever be at standard rate. Serious thinking required, I think.

[ladybirder]

If my figures are correct (and don't bank on it), you would have to draw your £44/week for circa 7.5 years to get your £17k back. So if I'm right I'd draw the pension.

[factor-fiction]

Another factor is whether you'd pay tax on the £44 a week- you could do if you have other income other than state pension- maybe a company one

[BlackadderV]

You would pay tax so that brings the net value of the increase down to £35.20 p.w.

[Sipowicz]

FF, she said at 11:57 it will be taxed.

[BlackadderV]

^^.. which means you would need to live for a further 9 years 4 months to recoup £17000.

[factor-fiction]

Thanks sipowicz- nobody else had mentioned tax in their calculations so I thought I'd mention it.

[Prudie]

I think this depends on you and how you view £44 a week. The likelihood is that the weekly option is more financially sound but if you could still get by without it I'd prefer the lump sum. £44 a week is piddling, you won't notice it, whereas having a lump to play with is far more interesting and comforting - but that's me.

[mazie]

I'd take the £17,000 and go on a super duper cruise and blow the lot x