Level or Non level

Reddevil74

Hi , I am planning on taking my DB pension at 57 after 40 years . ( 4.5 years)

Approx 17500 + 110k reducing to 9000 when state kicks in so a small uplift .

Or

15000 and 90k and a full state pension.

I favour the former , as I dont know how long I live . But ive noticed on all forums the standard reply is to plan until 90 which would imply I should take a non level and get 15k and full state at 67 .

Why is this when many dont live that long ?

Any advice about whats best and the thought process behind the advice greatly recieved .

I will be happy to work part time to cover my mortgage and make things easier until mortgage is cleared about 65 . Both are inflationary backed.

Many thanks.

Albermarle

If you are male, you will live on average until you are 84. You have a 50% chance of living longer than that, and your chances are improved further if you are healthy, well educated, good family and social life and financially comfortable.

You have a 25% chance of getting to 92.

Regarding the detail, do you have to take the lump sum, or can you have a bigger pension instead?

Reddevil74

Hi , thanks for reply .

Yes I have to take the lump sum , the level does result in a £3000 odd uplift as it reduces by a smaller amount than the full state pension. .

The lump sums are tax free in both & all pensions inflationary linked even when reduced.

Its basically still a gamble on life expectancy.

Im aware pension scheme wants you to take the level and i cant lie it is hard to resist.

I wasnt aware the life expectancy was so strong. Its feels like a impossible decision to be honest .

Warm regards

Marcon

The pension scheme doesn't 'want' you to do anything, so don't let that misconception influence what can only ever be a personal decision based as much on instinct as anything more scientific!

On-the-coast

I just picked up pie & chips (his choice) and dropped them round to my dad for his 91st birthday. My mum asked for fish and chips. I’d certainly take the much higher “level” pension - which I assume includes indexing?
It’s a personal choice as said above - and supposed to be cost neutral (on average) to the pension provider.

Reddevil74

Yes its index / inflationary linked.

The level is only higher pre 67 .

I think I will take the level at 57

I have 4.5 years as yet

Its still a 3k uplift so at present rates 9 + full state at 67 & 17500 before also 20k more on 25% tax free

These numbers should rise before 57 as well im just using whats in front of me .

Thanks again for replies

OldScientist

Worth looking at https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07 to see the details behind the numbers given by @Albermarle

Obviously, no-one knows the actual date of their demise (it would make planning much easier!), so all you can use is the cohort averages given by the ONS as well as current health and family mortality to make a guess.

Linton

https://forums.moneysavingexpert.com/discussion/6687034/level-or-non-level

I consider 90 too young for retirement planning. 95 or older would be more prudent.

If you die early you will be dead and so not in a position to care about your pension. If you die late you may need the money to pay for extra support. The worst case is if you live longer than your money. Though as you are covered by a DB pension living to a very old age is much less of an issue.

Is your pension + SP sufficient to continue the lifestyle you are used to?

westv

I was expecting a completely different question based on the title but, obviously, it made sense when I read the first post.

mrklaw

I assume they both roughly level out around mid-80s so there is no mathematically wrong answer, just an answer that is better for your circumstances and income need which only you’ll have a good view of

Reddevil74

Yes I believe i would be fine on both choices .

Feels like the impossible choice more now( in 4.5years time ) v less later or less now v more later .

Parents both alive at 80 ! But then no guarantees for myself .

Good to read other opinions

Thanks