Should I defer?

Toptrump_2

I retired from work in June aged nearly 66, having deferred my state pension for 11 months from when I reached SPA. I have now been asked to return to work to assist with an IT project, with will last about 12 months. I will be paying standard rate tax and my question is: should I defer my state pension again and earn an extra 10.4% on it or should I draw my salary and pension and enjoy the extra cash, bearing in my I will lose 20% in tax. I believe it takes around 10 years to recuperate the state pension you give, after which time you pull ahead.

Your_Hero

Toptrump wrote: »

I retired from work in June aged nearly 66, having deferred my state pension for 11 months from when I reached SPA. I have now been asked to return to work to assist with an IT project, with will last about 12 months. I will be paying standard rate tax and my question is: should I defer my state pension again and earn an extra 10.4% on it or should I draw my salary and pension and enjoy the extra cash, bearing in my I will lose 20% in tax. I believe it takes around 10 years to recuperate the state pension you give, after which time you pull ahead.

If you don't need the income why take it? You may also be pushed into higher rate tax (40% or 45%) depending on what your income will be from work and all other sources.

Unless you are in poor health, or a need for a lump sum, you ought to take the increased state pension as income. But this does depend entirely on the individual's circumstances.

Linton

Assuming you are in reasonable health your life expectancy is about 20 more years. If you dont need the money defering is pretty much a no-brainer.

kidmugsy

i) It's likely to be to your advantage to defer, particularly if you have a younger, healthy wife to inherit your extra pension after you are, ahem, finished with it.

ii) Tell the firm that you are not drawing your old age pension, and ask for a pay rise!