Defer state pension-Are my sums correct?

Dazed_and_C0nfused

blindman said:

bluenose1 said:

Has you considered Mrs B giving  you the married tax allowance so you could receive an additional £1,250 tax allowance.  If her income is less that £12,500 it is worth considering. 

What is the marriage tax allowance? The marriage tax allowance allows you to transfer £1,250 of your personal allowance (the amount you can earn tax-free each tax year) to your spouse or civil partner if they earn more than you. If your claim is successful, it will lower the higher earner's tax bill for the tax year,

Already done that thanks

That means my previous figure is wrong though.

On £12,000, the income you originally referred to, Marriage Allowance isn't saving you any tax at all so if you took the State Pension of £10k now rather than getting £8,100 net of tax you would actually be getting £8,350 net of tax as the Marriage Allowance recipient gets £250 knocked off their tax bill.

nigelbb

bowlhead99 said:

blindman said:
You have cleared up the misunderstanding I had.

I see now that for ever year I defer it takes 17 years to get that years missed payments back.
For some reason I thought that if I deferred for 17 years anything after then would be profit?
Even so it's certainly not worth it.

If you only live an 'average' amount of time it probably won't appear worth it. The previous (pre 2016) scheme was much more lucrative, in terms of rate and it being inheritable by a spouse. But I guess it was too lucrative, which is why they reduced it to the current more sensible terms.

What it might be good for is insurance against living a long life. Increased pension forever is a good thing if you're in the half of people who live longer than average rather than shorter than average. One of my grandparents is 100+ not out.

If you take the pension and at the end of the year, realise you don't need it and the cash is going spare but you don't wish to risk it on the stock market, you could buy an annuity, but you'd find they pay quite a bit less than the rate the government is offering. As bond yields and market annuity rates are on the floor. So if you don't need the cash the pension would have paid over the next couple of years,  deferring is not an entirely terrible plan if you don't want stock market risk of sticking in in an ISA or pension investment. 

You can defer once after you have started drawing your pension so if you take the pension and at the end of the year, realise you don't need it then just defer as it's a better return than you will safely get on the stock market.