To defer, or not to defer?

mgdavid

jamesd wrote: »

.........
Someone with no earned income can pay in up to [STRIKE]3280[/STRIKE] 2880 net, ..........

minor typo James...

maximumgardener

as has been said already ....your mum at 65 has likely already deferred her SP!

do you know her State Pension age? easy to find that... just use her birthday on the gov.uk web site

if she's still working full time with satisfactory income then deferring further is an option. widely regarded
as a 10-11 year payback......so your mums call. many say take it now.......your due it !!

Zudecke_2

But the question is - what is the financially best option - deferring or taking it now?

She became pension age as of 6th July 2014 and has deferring since then.

She works full time (Ish) - she works 4 days a week - and earns ~16kp/a.

Has no other investments (including pvt pension) or other income.

Many thanks

xylophone

6th July 2014

Are you sure of this?

You state that your mother is 65.

Even if she became 65 on the day you posted last month (22 Feb), her SPA would have been 6 Jan 2012.

Re deferring her state pension

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372517/dwp024-102014.pdf

Zudecke_2

She's 63 and 10 months. Apologies for the inaccuracy in my OP. I should know by now to never a woman's age UP!

jamesd

Zudecke wrote: »

But the question is - what is the financially best option - deferring or taking it now?

Continuing to defer until she has deferred for at least five years. Longer up to perhaps ten if she continues working and remains in good health. After five years the chance of living long enough to break even starts to drop more rapidly and by ten it's starting to look more unlikely than likely but the long term insurance against long life value remains, assuring a higher income if she's one of those who do live longer than average.

Numbers given assume female and normal good health. Values for males are lower and for those not in normal good health can be much lower depending on life expectancy.

brewerdave

Just a comment on the last post, it may make financial sense to defer for 10 years or more BUT even if you are in "good" health, who wants to have stacks of income at 80 years old ? I intend to defer for 3 years, so I get extra income when I'm young enuf to still enjoy travel and my grandchildren:)

xylophone

When does your mother wish to leave paid employment?

jamesd

brewerdave wrote: »

Just a comment on the last post, it may make financial sense to defer for 10 years or more BUT even if you are in "good" health, who wants to have stacks of income at 80 years old ? I intend to defer for 3 years, so I get extra income when I'm young enuf to still enjoy travel and my grandchildren:)

She has no other income besides work at the moment and I assume that will continue to be the case. If she gets the maximum flat rate state pension level she'd have an income of £8,000 a year before deferring. That's not a lot to be living on at any age.

Five years of deferring would increase that to £12,160, much more comfortable.

Ten years of deferring would increase that to £16,320 (but would require her to work for another 8 years, which isn't likely to happen).

The median average income for a pensioner household is around £18k a year so if she starts at 8k she wouldn't get there after either level of deferring.

jamesd

Worth noting, posts so far have assumed that she's a home owner and not receiving benefits. If she would receive means tested benefits it might not be worth deferring unless she defers long enough to get well above benefit level.