Should I take my final salary pension early with or without a lump sum?

jamesd

VXman said:

I have a teachers pension. I can take it now and it will be £20K per year with. £61K lump sum. Alternatively I could take £ 16.5K  and £109K lump sum. My wife is retiring too and In a similar situation with a few grand less PA. We have other saving/investments of about £500,000 and house is paid for. No other significant outgoings/loans/depts.

My feeling is go for the higher lump sum. It will be 13 years before it becomes less advantageous. The pension will attract inflation linked rises each year but I feel putting the money in a reasonably cautious ISA  S&S find should return at least that much. 

What happens to the actuarial reductions if you live on the £500k for a few years?

Sometimes adding a mortgage can be useful. If the repayments are covered by the higher income you might end up with more income overall, with the lower actuarial reduction paying for it.