Delaying State Pension for 6 months

NotTightJustCareful

In a year's time I will be 66 and will be able to take a full state pension. I have decided to work 2 days part-time till 67 and then retire. I forecast that in that year I will be receiving about 2.5K in interest payments on bank fixed term bonds which aren't in a ISA . If take my pension at 66 I will be due yo pay around £300 in tax on my saving. If I delay my pension by six months it will bring down my total taxable pay down to 16070 for the year so I won't have to pay tax due to the starting rate for interest. I can also max out my pensions contribution to be 94.5% of my salary. Is this a good idea or should I take the state pension pay the tax on the interest and be done with it. Deferring the state pension for 27 weeks would give my a 3% uplift to my state pension which 5.8% for the year. This is index linked to price inflation I understand which strikes me as a reasonable annuity rate for a 66.5 year old. Am I thinking straight ? 

Marcon

NotTightJustCareful said:

In a year's time I will be 66 and will be able to take a full state pension. I have decided to work 2 days part-time till 67 and then retire. I forecast that in that year I will be receiving about 2.5K in interest payments on bank fixed term bonds which aren't in a ISA . If take my pension at 66 I will be due yo pay around £300 in tax on my saving. If I delay my pension by six months it will bring down my total taxable pay down to 16070 for the year so I won't have to pay tax due to the starting rate for interest. I can also max out my pensions contribution to be 94.5% of my salary. Is this a good idea or should I take the state pension pay the tax on the interest and be done with it. Deferring the state pension for 27 weeks would give my a 3% uplift to my state pension which 5.8% for the year. This is index linked to price inflation I understand which strikes me as a reasonable annuity rate for a 66.5 year old. Am I thinking straight ? 

I think you're making your own life needlessly complicated for very little return. You only get a 5.8% uplift if you defer for a full year.

How much pension are you foregoing by delaying for 6 months?

Stubod

I am defering mine for 12 months for similar reasons...is it worth it???....takes about 18 years to break even....do you feel lucky???

NotTightJustCareful

I am not sure if it is worth deferring to be honest. I know with the calculations it takes you 17.6 years to recoup the monies which does not seem very generous. However I was planning to buy an annuity with a portion of my pension at some stage and 5.8% which rises with inflation does not seem a bad deal compared to what is on offer for a 66 year old. In addition I don't have to pay £300 tax on interest i would incur if I took the state pension at 66 but heck so what. Life is too short and could be dead next year so I will take the state pension at 66 and be done with it.