Take or defer pension. Advice please.

teachergirl

I am a teacher as is my husband who is seven years older than me. He was due to retire at the end of next academic year but various circumstances mean he has decided to go this year instead. ie 6 months time.
Now we are looking at different calculations to decide if I should also go then as it had always been our plan to retire together. My first question is, If I should go this year should I take my pension at a reduced figure or defer it until I am 60. We are in the privileged position that this would be possible but my husband says it is a no brainer to take it now. So I am asking for you lovely peeps to take a look and see if there is anything we have not thought of.
If I take my pension at 55 I will get £10,479 yearly and a lump sum of £31 438.
If I take my pension at 60 I will get 13,067 yearly and a lump sum of £39,203.

If I take my pension now my pension for 5 years would be £52,395. I would have to live 20.23 years before I start to be losing money, which obviously I do hope to do, but by then my state pension will also have kicked in.
Thoughts please

kinger101

Not sure about your calculations. If you take you pension at 55, the crossover point for my comparison is after you reach the age of 77. Mean life expectancy at 65 is 21 years for a woman, but you're not a average.

But the question isn't purely about money. It's about your quality of life.

What is your state of health?
What lifestyle could you have on the two options?
Do you enjoy your job (and the social contact it brings)?

I'll take two extremes. If your going to give up a job you love to spend five years sitting on the sofa watching crap TV, arguing with your husband, and living on the breadline, then stay at work.

If the extra income of waiting a few years is negligible, and you have plans for a active retirement, doing the things you really enjoy, then go now.

An alternative would be to reduce your hours, but seek advice on how that impacts your pension. Retirement doesn't need to be abrupt.

ams25

You need to look at this in totality with any savings, your husbands pension provision and your combined income requirement - now and over time as it likely declines then rises again (active early retirement, slowing down, rising health related costs)

are the 2 pensions plus any savings enough now to cover the period to SPAs? If he passes first as is more likely if he is 7 years older would you get a spouse pension and at what level? Remember you will loose his state pension at that point. So is your SP plus reduced teacher pension + any spouse pension enough. If yes then you are good to go.

If you are over provided for when both sp and teacher pensions are in payment could you save/invest a proportion from this period to boost your income when he has passed? Of course there is no guarantee this period will be long enough to make a difference but hopefully it would.

justme111

Factor in money lost to tax as well - on a difference between 13 and 1O k it would be about 6OO yearly lost to tax

teachergirl

Hi there thank you for the quick replies folks. I didn't include any of the other details like my hubby's pension because it makes it very complicated but will add some other details. have to pop out now so will give more details soon.
BTW Definitely no plans to sit on the sofa. Love my job. However plans to travel the world are difficult if one of us is restricted to school holidays.;)

LHW99

Don't forget your pension is inflation linked. If you take it early that will mean a smaller "extra amount" in increases - eg 3% of £10,479 is £314, of £13067 is £392 (p.a. before tax). If inflation takes off over the next 20 years, would the fact that your pension would increase less in money terms (albeit keeping up with inflation) if you took it early make it difficult to do things you planned to?

teachergirl

Ok some more details to see if they help.

My husbands lump sum is £93000 and annual pension £30 800. If he dies I will get 15 500 a year.

Assets Our house. Value £650000(Mortgage 37 600. To be paid off when probate goes through on my MIL's estate.)
My MIL's house . Value £265,000. Too soon to consider selling. Will rent out to family and friends in order to cover costs of keeping. 2 minutes from beach in Dorset.
2nd House in Dorset. Value £165000. Has been rented out for years to the same couple. Would sell to them if they can afford . Rent is £500 a month.(approx £395 below market rent ) We think they are unlikely to be able to afford to buy it and changing anything about this arrangement is probably non -negotiable as they are family friends.
Cash sum of about £90000 after probate. Out of which we will pay off our mortgage. Funeral costs and solicitors fees.

My head seems to be going around and around in circles. We don't have an extravagant lifestyle. We will do lots of walking but also want to travel outside of school holidays. We travel back packer style with a few nice hotels thrown in to account for the fact we are not getting any younger. My husband just says we should do it and if we run out of money sell a house!

Brynsam

Get some proper advice - the sort you pay for, based on all your circumstances. Guesswork by people on this site, however well meaning, but based on inadequate information, isn't the answer. Financial advisers do things called 'fact finds' for a good reason, not just to up their own fees!

Whatever you decide, hope you and your husband have a. long and happy retirement.

ams25

I'd recommend, if you have not done so already, you cash flow the numbers if only to confirm what your husband is saying in black and white, but if his pension is 30k (from this year?) and if you have 50% spousal and have a modest lifestyle and a couple of spare houses to tap into, then I think it looks safe to me.

What is holding you back...if the numbers look (so) good?

teachergirl

ams25 , not sure just have always been conservative on the risk taking front. We were always going to leave in one year and one term but now our circumstances have changed my husband wants to go this year. Brynsam we will get proper advice as well and can do this through our union however we want to have some idea of what we are talking about before we go as well.

AnotherJoe

Seems very straightforward to me.

If they retire together now they will have an income in excess of £40k, and that's disregarding the £6k from rented house, and getting on for half a million in cash and saleable property, before you get into "family friend" house and downsizing, eg a backstop of selling their house for £670k and living 2 minutes from the coast !

This seems ample to support their lifestyle !!

OP pack it in now whilst you are in good health and enjoy your time with your husband,who knows what the future holds.

ps you said

teachergirl wrote: »

ams25 , not sure just have always been conservative on the risk taking front.

What risk?????????/

The actual risk you have is that you carry on for a few years at work, hubby doesn't get to do things with you over that time, then one of you gets ill just as you retire .That's far far more likely than any risk of not being able to support yourselves on a mere £46k a year with another half million knocking around "just in case".