What would you do?

kassy64

Hi, I am missing 1 year from my NI record (due to being 'contracted out' for many years) so my SP forecast shows £216.03 pw and max if I buy the missing 1 year as £221.20 pw. The cost if bought now is showing as £907.40. So, after income tax I would be net £4.14 pw better off from 67 years to gain approx £215 per year so would be in profit after 4 and a bit years. I realise inflation will increase that figure. I'm just not sure whether it is worth it and need some convincing to buy or to not buy. I have a decent civil service pension, age 60 and currently in good health. Convince me or not to buy the 1 year. Thanks

Dazed_and_C0nfused

kassy64 said:

Hi, I am missing 1 year from my NI record (due to being 'contracted out' for many years) so my SP forecast shows £216.03 pw and max if I buy the missing 1 year as £221.20 pw. The cost if bought now is showing as £907.40. So, after income tax I would be net £4.14 pw better off from 67 years to gain approx £215 per year so would be in profit after 4 and a bit years. I realise inflation will increase that figure. I'm just not sure whether it is worth it and need some convincing to buy or to not buy. I have a decent civil service pension, age 60 and currently in good health. Convince me or not to buy the 1 year. Thanks

Maybe wait till nearer to your SPA but you could be getting that extra £4.14/week for 30+ years.

kassy64

Dazed_and_C0nfused said:

kassy64 said:

Hi, I am missing 1 year from my NI record (due to being 'contracted out' for many years) so my SP forecast shows £216.03 pw and max if I buy the missing 1 year as £221.20 pw. The cost if bought now is showing as £907.40. So, after income tax I would be net £4.14 pw better off from 67 years to gain approx £215 per year so would be in profit after 4 and a bit years. I realise inflation will increase that figure. I'm just not sure whether it is worth it and need some convincing to buy or to not buy. I have a decent civil service pension, age 60 and currently in good health. Convince me or not to buy the 1 year. Thanks

Maybe wait till nearer to your SPA but you could be getting that extra £4.14/week for 30+ years.

Thanks, but wont the cost of the 1 year NI increase by then? It currently shows as £907.40, so any increase would make it an even less attractive position due to higher outlay.

Hoenir

Where else can you invest your money for a guaranteed gross yield in excess of 29% ? 

SouthCoastBoy

If it was me I would get a part time job, means I would get a little bit more money and get the extra year for "free"

kassy64

Hoenir said:

Where else can you invest your money for a guaranteed gross yield in excess of 29% ? 

Agree, but its only guaranteed if I'm still lucky to be alive in to my 70's. Hopefully I will be but nothing is guaranteed. So, I take it that you would be in the YES column?

kassy64

SouthCoastBoy said:

If it was me I would get a part time job, means I would get a little bit more money and get the extra year for "free"

Oh, hadn't thought of that, not sure I am willing to go back to work though but will bear it in mind.

bjorn_toby_wilde

kassy64 said:

Hoenir said:

Where else can you invest your money for a guaranteed gross yield in excess of 29% ? 

Agree, but its only guaranteed if I'm still lucky to be alive in to my 70's. Hopefully I will be but nothing is guaranteed. So, I take it that you would be in the YES column?

Very much in the yes column for me. The odds are that you will live much longer than that.

Don’t forget the pension also increases by inflation every year.

If you’re wavering, you could always put the money into a high interest savings account and you can decide nearer the time.

Moonwolf

kassy64 said:

Hoenir said:

Where else can you invest your money for a guaranteed gross yield in excess of 29% ? 

Agree, but its only guaranteed if I'm still lucky to be alive in to my 70's. Hopefully I will be but nothing is guaranteed. So, I take it that you would be in the YES column?

You can put in your details here  https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Think of it this way

I've read kassy as female, I apologise if I have that wrong, but at 60 you have a 90%ish chance of reaching 70 and a 50% chance of reaching 87 you have a 25% chance of reaching 95.

So 10% chance of not making a profit which won't affect you hugely unless you are really scrimping, you probably have savings you weren't going to spend by 70 anyway.

50% chance of making 370% profit (not including inflation)

25% chance of  making 560% profit

That assumes you are average, as Civil Servants are overall more educated and wealthier than the average (as that life expectancy includes people in poor postcodes living only on state pension) then your odds are probably better than that.

Definite yes from me.

dharm999

Can you work on a self employed basis and pay class 2 NI on a voluntary basis?  Would cost a lot less than £907

kassy64

dharm999 said:

Can you work on a self employed basis and pay class 2 NI on a voluntary basis?  Would cost a lot less than £907

Hadn’t thought of that, may look in to it.