Final Salary Pension Early Payment and Lump Sum

Chorlie

Ok I might be missing the obvious here, I know little about Pensions, but it seems like your willing to give up about £10k a year (from your 60th birthday) to get £76k plus £11.5k a yr....

So, over the next 6yrs your get about £145k, which means if you live until you're 74yrs old it's about even, if you live till 84yrs old you'll be about £100k worse off....Yes there is Tax, Inflation etc....but you get my idea.

I guess the question you have to ask yourself is 'When you've fully retired will an extra £10k a year make a difference to my living standards and being able to pay the bill and enjoy your retirement?'.....If the answer is yes, wait 6yrs.....

ermine

'When you've fully retired will an extra £10k a year make a difference to my living standards and being able to pay the bill and enjoy your retirement?'

That is one of the questions you have to ask yourself. But there is a second one. Every day your life is getting shorter by one day...

Forcing down your everyday recurring costs is the secret to early retirement. For instance, paying off my mortgage saved me about £7000 a year, which is about £8400 less income I need (because you don't have to pay tax on what you don't earn, NI doesn't apply to pensions). All the peripheral rubbish of wants that gets sold to us means we have to work longer to pay for it. Take Sky TV - at £50 a month that's £600 a year. Is that worth the OP working another six months for? Beats me, only they can make this call.

It is a balance, working longer so more misery now as against retiring earlier but on a lower income. It all depends on the lifestyle you want to lead.

Working this out for myself cured me of consumerism and gadget-freakery. I discovered that it boiled down to who is in my life not what is in my life that matters, and time with the who that matters. The added advantage is that once you kick consumerism your saving capability skyrockets (assuming you are still earning). I saved well over half my gross salary every year for the past few years, simply by realising that getting my time back and spending it with the people that matter in my life meant so much more to me than having more manufactured crap in my life. For other people it will be different, each to their own.

But you have to ask both questions. Can you carry on working to increase your pension/not draw it short? And what is the opportunity cost? ie what would you be doing with the time you are losing to work. Each day you go to work is a day you will never live again...

atush

I have 3 sports mad boys and a sports mad OH. Sky is worth working longer for- if we didn't have it we would spend more than 600 a year extra in other entertainment. We don't go out much unless we are on holiday lol.

I am thinking there would be more spent on gas, sports equipment, movie rentals, DVDs, Video games, food, drinks, we might even take up going to the local pub lol.