Taking pension benefits early...good or bad idea ?

[tekois]

hi.....just trying to get some advice and thoughts......i've been a postman for 35 years plus. just turned 55yrs old and thinking of taking my pension benefits early. my question is ....those of you who took that opportunity...do you regret it and why....or do you think it would be better to just wait until i'm 60yrs old. Really would appreciate some direction on this. Thanks Guys.

Dave

[sputnik]

Hi, I took what I could get as soon as I reached age 55 as I truly believe that to leave it till retirement would leave me with next to nothing, or nothing at all!

[TrueBlueTerrier]

one drawback of taking it early as a pension is that you reduce the pension by 5% for each year you take it early.

May not sound much but if you were due £100 per week at 60 then taking it at 55 would mean £25 a week lost minimum, and then if you haven't built up the maximum number of years then taking the pension early means you'll lose more as you are no longer paying into it and neither are RM.

my advice is get some pension advice from a professional, it may cost but it should be worth it in the end.

[stroller]

tekios,

You will get so many different answers on here, I know you lose 5% per year taking your NRA60 pension and 50% on your NRA 65 pension but at the end of the day it's your call, I was always going to take my pension benefits ASAP, I have just taken mine and although you lose 5% per year you will get it for 5 years longer then waiting until 60 but you already know that, plus you will not pay in anymore so you will be better off in your wages as well.

It simplifies things for me no more paying in and I got my maximum lump sum and my pension at the end of every month, I don't care about losing 5% per year when I am on the sun lounger using my monthly pension money on holidays etc etc.

Hope this helps

[RobertT]

Your pension is for your retirement, by taking it early you are potentially forcing yourself to work for longer, because you will have less to live on when you do actually pack up work.

You’ve paid into it for 35 long years, don’t throw it away now.

[moyaspawn]

Do you also lose 5% a year on your lump sum.

[heapsy]

Do you also lose 5% a year on your lump sum.

Yes. That could be quite a bit too.

[Kevin.r.smith]

If you take your pension at 55 it will take about 20 years before you are out of pocket

[heapsy]

If you take your pension at 55 it will take about 20 years before you are out of pocket

That might be true but has nothing to do with it. The REAL issue is can you manage on a reduced pension? The pension you receive every month will not increase as much annually as one that isn't reduced. Most people run out of cash after only seven years of retirement. Even if someone worked until 65, that means at the age of 72! Take a look on your local high street and see how many are still very active in their 80s. Being active is one thing, but being skint in old age is no fun. If people are so obsessed with taking a pension early then don't pay in to one. From a personal point I would like the state pension to be changed so that people pay for their own. Not as it is now, paying for other people. 2 reasons for this, 1 It would get the message across that there is no such thing as a free lunch. We are statistically one of the worst countries when it comes to saving / investing for our futures. Secondly, it might actually help us have a decent length of time in retirement. The current system is designed to keep everyone on the tread mill. You have to keep working to pay for those who have gone before us. The problem is, that as we live longer, the goal posts are being moved constantly. I cannot believe the naivety of the masses. Those of you on here who have children should stop and think. They will not see a state pension until they are 75+. How selfish is that? They will be paying for YOU. The only way is to educate people to save and invest as early and as much as they can. Deciding when they want to retire at 16 is extremely hard for most. Unfortunately it has to be a reality. A state pension where people pay for themselves, is the only way to tackle the problem. We cannot afford to keep paying for those that don't give a toss. If they don't save then tough. Not our problem. Eventually the truth will come out. Unfortunately it will be too late. Working later in to old age will increase unemployment in future years. No politician will admit to it but THAT is fact. We cannot keep replicating jobs to provide employment. This will also be compounded by uncontrolled, mass immigration, it has to end now. BTW if you run out of money, the state will not pay benefits to you if you do.

[jetblack]

Deciding when they want to retire at 16 is extremely hard for most. Unfortunately it has to be a reality.

That would be great Heapsy. Unfortunately, at the age of 16 most are going to spend at least another 5 years in education in the hope that the qualifications gained will act as sound currency in the job market. They will leave indebted to the tune of circa £50k. They will then find that the qualifications aren't quite working for them in the way that they had hoped. They will struggle to find gainful employment. They will spend the next 10-15 years living with their parents and saving hard for the deposit on their own place. At 35 they will get their own place and a £175k debt to go with it. Then kids will come along etc etc.
And then, when they get to 50 their employer will tell them that the money they thought they were going to get in retirement from the company pension scheme they'd dutifully been paying into for the last 20 to 25 years is now going to only pay a half of what they had been forecasting hitherto.

And you want to cut the state pension ?

[heapsy]

Deciding when they want to retire at 16 is extremely hard for most. Unfortunately it has to be a reality.

That would be great Heapsy. Unfortunately, at the age of 16 most are going to spend at least another 5 years in education in the hope that the qualifications gained will act as sound currency in the job market. They will leave indebted to the tune of circa £50k. They will then find that the qualifications aren't quite working for them in the way that they had hoped. They will struggle to find gainful employment. They will spend the next 10-15 years living with their parents and saving hard for the deposit on their own place. At 35 they will get their own place and a £175k debt to go with it. Then kids will come along etc etc.
And then, when they get to 50 their employer will tell them that the money they thought they were going to get in retirement from the company pension scheme they'd dutifully been paying into for the last 20 to 25 years is now going to only pay a half of what they had been forecasting hitherto.

And you want to cut the state pension ?

Er no. Read the post. What I actually said was that it should be paid for by the people themselves. If you don't think it is possible then think again. That is what happens in the US. The new NEST pension that has been rolled out by the UK government is a fore runner of that and probably will be the new state pension. In time. What is the alternative? A Ponzi scheme like the one we have now. Doomed to fail. Having to pay more in, to get less out. That is exactly what the new flat rate state pension is, as people will find out to their cost in a few years time. As for the point about further education , why bother? If you are going to get a mass of debt, and then end up on very ordinary salaries, then don't do it. The days of further education providing much better salaries are, sadly, all but over. By the time you have paid off the debt, you would almost certainly be way behind your peers in earning terms, compared who didn't go on to further education in the first place.

[fishtank]

All you'll ever get on here are opinions.
Nice enough but ultimately just someone else's idea of what to do with your life, do what you feel is right, there are no wrong decisions in life just different paths for people who want to go another way. Pensions are becoming less relevant as a way of funding retirement , ours is still pretty good but set to deteriorate, most employer pensions wouldn't fund bread and water and a cardboard box.

[jetblack]

What I actually said was that it should be paid for by the people themselves.

You mean, they don't already ?
Isn't that what NI is for (and taxation in general) ?

The new NEST pension that has been rolled out by the UK government is a for runner of that and probably will be the new state pension.

That looks like a workplace pension first and foremost. A defined contribution one at that.

And you think the current state pension should be replaced by something along those lines ?

Something to consider here is that we are (in the medium to long term) moving toward a post work society. We are not only going to be looking at a state pension, but a universal basic income.

Just my opinion - one in a sea of internet opinions

[RobertT]

The problem with pensions in the UK it that they’re not compulsory and as long as that’s the case there will always be some people who won’t pay towards their own retirement. Infact that’s one advantage in todays state regime – everyone pays NI above earnings of a certain amount, or gets NI credits if they receive certain benefits. Therefore they’re ‘automatically’ building up state pension whether they like it or not.

The whole benefits system is based on the workers of today paying their taxes to pay for those receiving state benefits such as income support, job seekers allowance and state pension. That’s been the case for years. The ‘new state pension’ is just redistributing the benefits differently, and benefitting the less well off in the process. The downside of course is that state pension age is increasing, so although we might be getting a bigger pension, we’ll be working and paying tax for longer. That is unless we are proactive from an early age.

The workplace DC scheme will get increasingly prevalent over the coming decades, it has to else why did the government introduce auto-enrolment! There’s valuable ‘free money’ available from such schemes from employer contributions, tax relief and salary sacrifice which saving outside a pension doesn’t offer. Although the Lifetime ISA may be a possible long term alternative. Only time will tell on that.

The only thing that is for sure is that the days of your employer providing a pension that’s enough to live on with all the risk on them is virtually over. The onus on providing a decent pension is now on the individual.

[Tman]

. As for the point about further education , why bother? If you are going to get a mass of debt, and then end up on very ordinary salaries, then don't do it. The days of further education providing much better salaries are, sadly, all but over. By the time you have paid off the debt, you would almost certainly be way behind your peers in earning terms, compared who didn't go on to further education in the first place.

Tripe. If you were to go to Uni to study Media Studies, or Film or some other such dead-beat waste then you'd have a point, but study something much in demand like Medicine, any one of a myriad Engineering disciplines or even law and you'll never be short of money. Better (for many) is to do an apprenticeship (that is, a proper recognised using tools apprenticeship, not six months in an estate agents) and bring the money in that way, but of course both of the above require effort and commitment, and that's too often lacking in the Facebook Generation.