Advice needed on whether to take pension now

thestens

Hi,
I have a small local Gov pension which I can either access this year when I am 60 or leave until 65. My husband and I don't actually need the income from it to live on so could leave it, but to me it seems like I may as well take it now and enjoy it, albeit a bit less than at 65. Or I could take a big lump sum and a small pension!! Help - what to do??? The figures are as follows:
Pension at 60 - annual pension £3283, lump sum £6860
Pension at 65 - " " £4264 " " £7796
Or Pension £2478 Lump sum £16523
I am 59, female, retired and at the mo pretty fit, from a long living family so fingers crossed could be around for a while!! Advice please - I haven't a clue!!

lilac_lady

I'd take the pension at 60 and enjoy life because you never know how your health will be in the future.

I know a lot of people will disagree but that's my advice.

sleepless_saver

If you take the pension now, it will increase annually with inflation. If you leave it till 65, will it increase meantime with inflation or with local authority pay increases? If the latter, then you may find that in practice because of pay freezes you don't lose out by much (if at all) by taking it now .

atush

If you don't need it, dont' take it and let it grow(unless you have bad health).

Lilac heart felt advice is perhaps why so many retire so poorly these days?

fairleads

thestens wrote: »

Hi,
I have a small local Gov pension which I can either access this year when I am 60 or leave until 65. My husband and I don't actually need the income from it to live on so could leave it, but to me it seems like I may as well take it now and enjoy it, albeit a bit less than at 65. Or I could take a big lump sum and a small pension!! Help - what to do??? The figures are as follows:
Pension at 60 - annual pension £3283, lump sum £6860
Pension at 65 - " " £4264 " " £7796
Or Pension £2478 Lump sum £16523
I am 59, female, retired and at the mo pretty fit, from a long living family so fingers crossed could be around for a while!! Advice please - I haven't a clue!!

If as you say you don't need the money to live on, I'd be tempted to take the least pension and the largest lump sum. And definitely so if your pension is taxable.

kidmugsy

How soon is your State Pension due? How big is that going to be?

xylophone

Do you have plans for what you could do with the pension/lump sum if you took it now?

thestens

Hi, thanks for the advice. I will get the standard pension at about 62. We don't have any specific plans what to do with the money; we are lucky to have other savings which we can draw on if needed. However, I too feel that to take the bigger lump sum and invest it ourselves (ISAs ??) probably makes sense - a bird in the bush and all that!! Any alternative opinions?? Not brave (or stupid?) enough for stocks and shares!Also don't want to do anything too complicated with the money. Will probably use it to travel more comfortably than we do at present!

sleepless_saver

If you take the lump sum and put it in a savings account whether a cash ISA or something else, it will lose value thanks to inflation.
Others will no doubt correct me if I'm wrong, but I don't think any straightforward savings accounts currently available keep pace with inflation.

atush

I agree, and my own opinion is investing in shares is not 'stupid' but wise. And I still feel taking a pension early, reduced, when you don't need it is unnecessary.

But you do what you feel you need to or in fact want to. It is after all your money.

jamesd

Looks as though the pension value goes up by 5.4% a year. From the look of the numbers and your health it'll be better to wait until normal retirement age for the pension.

The commutation rate for the bigger lump sum is 12:1. That's a very bad deal and you shouldn't take more lump sum unless you're desperate for money. If you can get the same rate for reducing the lump sum and getting a higher ongoing income, that looks like a good idea. Means you're getting 8.3% plus the effect of increases in the pension by not taking the lump sum and you're not going to get 8.3+% return risk free anywhere else!

Takes something like 16 years to break even on a delay of five years. Half of 60 year old women can expect to live at least 28 more years.