Savings Lump Sum

anicholles

I'm due to start drawing my company pension (final salary scheme) and I'm undecided whether to take a larger lump sum, or a larger monthly pension. Does anyone have any views on how best to make that decision?

Stavros_3

I was in a similar position last year. There is I'm afraid no simple answer, Life expectancy is now higher than it was 20 yrs ago so taking a larger monthly pension sounds attractive, however, I have in the last six months lost 3 friends who died in their early 50's and one was 49. Having attended their funeral's I made the decision to retire on the earliest date possible and took the maximum lump sum, which is now invested.
By doing that I have guaranteed my wife a healthy sum should I decide to pop my clogs early which she would have been denied had I opted for a larger pension. In the profession that I worked in (public service) I do not know of one single person that opted to take a larger pension, instead everyone opts to take the maximum lump sum.
At the end of the day the choice is yours, good luck

soulsaver

Stavros wrote: »

I was in a similar position last year. There is I'm afraid no simple answer, Life expectancy is now higher than it was 20 yrs ago so taking a larger monthly pension sounds attractive, however, I have in the last six months lost 3 friends who died in their early 50's and one was 49. Having attended their funeral's I made the decision to retire on the earliest date possible and took the maximum lump sum, which is now invested.
By doing that I have guaranteed my wife a healthy sum should I decide to pop my clogs early which she would have been denied had I opted for a larger pension. In the profession that I worked in (public service) I do not know of one single person that opted to take a larger pension, instead everyone opts to take the maximum lump sum.
At the end of the day the choice is yours, good luck

It'll be just your luck to live to a ripe old age.....;)

soulsaver

One of the IFA's 'll be along in a bit and show you some calculation (which escapes me for now) that based on certain assumptions can usually make it clear cut.... .

Nomad25

Having seen our retirement fund lose value faster than a ferrett up a drainpipe, we had this dilemna last year. Can't advise you, but can tell you of our decision.

On gut reaction, a very little understanding of finance, a wing and a prayer we went for

a lump sum and lesser pension option too.

I have nothing against IFAs, but not many of them were able to predict this pile of financial poo we are all in now. However I'm sure they willl give you some sensible guidelines on the hundrds of variables needed to help make decision.

jennifernil

We too went for the maximum lump sum, for 3 reasons.
1. Taking the lump sum did not affect the spouse pension

2. Even after taking it we still had a pension of £21500 plus state pension of around £9000, so plenty to live on.

3. It enabled us to pay off a mortgage on the flat we bought for our student daughter, buy a new car and caravan for our retirement travels, and still leave a rainy day fund in the bank.

OH's commutation rate was not good, but we do not regret our decision. His Dad died at 64, we hope he takes after his mum who died at 98. If we run out of money we can sell the house and downsize, that could yield £250000.

And now he is "retired" he can work when he wants and full time could earn almost twice what he did before! We didn't know this, so it has come as an unexpected bonus. OH enjoys feeling needed so I have to limit his working hours!