Actuarial Reduction - any insights?

seven-day-weekend

I have no income at the moment (apart from a tiny bit from my UK house) and am a non-taxpayer.

I have never done the number-crunching (don't know how!), - didn't realise it would take that long to make up if I took it at 65..

But the thing is, my pension is ALWAYS going to be reduced, isn't it, for the rest of my life.

What I'm worried about is the long-term, if (Heaven forbid) I am left on my own on a tiny income. It's not going to be a huge amount anyway! Although if this happens I will get half of my husbands' Teachers' Pension.

Don't know what to do.......

And forgot to say, THANKYOU SO MUCH for working this out for me.

I've just mentioned it to my husband, he was quite interested the same as I am.

So,what I'm going to do Edinvestor, is write and ask for some projections....for taking it at 60, and at 62, as well as at 65.

Then, if you don't mind, I'll come back to you for your comments, if that's OK.

I have, as you probably already know, got a full State Pension (plus about a fiver) to come in Januart 2010.

Decision, decisions.....

EdInvestor

seven-day-weekend wrote: »

I have never done the number-crunching (don't know how!), - didn't realise it would take that long to make up if I took it at 65..But the thing is, my pension is ALWAYS going to be reduced, isn't it, for the rest of my life.

It will be, that's true. How long do you think you will live?

What I'm worried about is the long-term, if (Heaven forbid) I am left on my own on a tiny income.

Either way, you will be under the level for pension credit, so it won't make any real difference in that context.

Although if this happens I will get half of my husbands' Teachers' Pension.

How much would that be now?

So,what I'm going to do Edinvestor, is write and ask for some projections....for taking it at 60, and at 62, as well as at 65.Then, if you don't mind, I'll come back to you for your comments, if that's OK.

Way to go. I had assumed that like many people you have a cash flow problem in the early years of retirement because state pensions haven't kicked in yet and you have money buried in property. Presumably at some point you will be able to realise some of that equity - whether through downsizing, sale of Spanish property or equity release and thus will be much less short of cash in later years.

Sometimes it can be sensible to take small pensions early in this kind of situation, because they can generate a lump sum which, even if it isn't much in the overall scheme of things, can provide a better safety net and ease anxieties which can otherwise spoil one's quality of life - which is what it's all about, right?:T .

seven-day-weekend

Hi Edinvestor.

The fact that I can get my State Pension next January is a biggy for us and will make a HUGE amount of difference to our cashflow. It is actually income we need rather than a lump sum at this present time (although of course the lump sum would be nice too!

Lump sum from LG Pension, although welcome, is not urgently needed as we do have some savings.

My husband's T Pension at the moment is just over £7.5k. So if I had half that I wouldn't be under the limit for Pension Credit, nor assuming I still had a similar amount of savings to what we have at the moment.

And who's to know whether Pension Credit will still be around then????

Anyway, hopefully I won't be on my own, so there will be my husband's T Pension and State Pension too.

And yes, at some point the Spanish house will be sold (for whatever we can get for it).

EdInvestor

seven-day-weekend wrote: »

It is actually income we need rather than a lump sum at this present time

Of course you can always top up your income by spending the lump sum over the 5 years if you have other savings and access to property equity later. It's quite common for people made redundant in their late 50s/60s who can't get another job to take the 25% tax free cash from one pension and use that for living costs until their main pensions kick in later.In your case that would mean the extra pension would be tax free, a small thing but every little helps. By the time the lump sum had run out index linking may well have brought the basic pension up to something like what you would have got if you waited to 65 as well.

My husband's T Pension at the moment is just over £7.5k. So if I had half that I wouldn't be under the limit for Pension Credit, nor assuming I still had a similar amount of savings to what we have at the moment.

And you would still be under the age allowance level for tax.