Why you should take your pension at 55

theoldmiser

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

QrizB

That's an interesting opinion.

Aren't most pensions actuarily reduced if you take them earlier than normal pension age for the scheme? So, by taking a pension at 55, you might receive ~half as much as you would expect at 65?

NoMore

I don't think its as simplistic as you say. 

You appear to be talking about DB pensions, how they increase in deferred status can be different perhaps some will have a better return before taking it than after. All will have actuarially reductions applied for taking them early, which is supposed to be cost neutral but its worth checking. Taking early while working can also cause you to pay more tax than necessary.

In short it will be down to the individuals available pensions, rules, tax position and plans that dictate this not their age. For some it will be right to take it at 55 for others it won't be.

emmaj1045

When I start taking my DB pension it will only increase by a maximum 2.5% per year. While it is deferred I get full inflation increases. Taking it ten years early could be a very costly error. 

LHW99

I took my small DB pension at 60 because that was the NRA.

I was still working elsewhere, but if I had left it until my actual retirement date (~64.5), there would have been no additional increases. Conversely if I had taken it at 55, it would have been reduced by ~5% for each of those 5 years.

Others will have different rules / needs to contend with.

Wyndham

It depends on the scheme. For one of mine I've done a spreadsheet - normal retirement age for that pension is 65, but if I take it before that, I get less each year. I've also assumed I will live to 85 (by no means a given, but a useful figure). My best option is to take that pension at 63, with a full lump sum. That way I will get the best 'return' and the hightest figure. Any earlier, and I will actually lose out because the pension amount will be lower.

Brie

Don't forget too that some people may be paying the lower income tax amount but taking a pension might push them into the higher rate which is a waste of money.  

Also to look for guaranteed periods.  My OH will get a set amount if I die before him from my DB pension.  The DC ones, depending how you take them, might only guarantee a payment if I die within 10 years or something.    

MX5huggy

theoldmiser said:

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

Massive over simplification of what are complex rules and regulations across different pension types and schemes. 

The advice should be to understand your pensions and what options you have and the costs of those options long before you are 55 so you can retire when you want with the money you need to for the life you want. 

Albermarle

QrizB said:

That's an interesting opinion.

Aren't most pensions actuarily reduced if you take them earlier than normal pension age for the scheme? So, by taking a pension at 55, you might receive ~half as much as you would expect at 65?

If you check the OP's profile, they have a number of 'interesting opinions' .

elsien

Mine can’t be touched until the age of 60. 

Marcon

theoldmiser said:

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

You're hopelessly wide of the mark in terms of accuracy - and you appear to be giving regulated advice when you aren't a regulated individual.

You've also failed to spot the fact that the minimum age for taking a pension will soon increase to 57.

DB pensions increase in deferment, even though someone is no longer paying in to them. The date when someone left active membership impacts on which parts of their pension increase and by how much.

If a DB pension is taken early (ie before the scheme's NRA), there is almost always an 'early retirement reduction factor'.

If it is taken after NRA, there is almost always a late retirement factor, in addition to inflationary increases. There are a tiny number of schemes where money not taken by NRA is lost (eg the 1995 NHS scheme), but they are very much in the minority.

Please don't propagate what is quite frankly dangerously misleading nonsense.