01-03-2017, 14:07
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#1
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cf.mega poster
Join Date: Jan 2004
Age: 61
Posts: 2,242
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Calculation check
Hi all
Sorry for what seem a simple things but would appreciate some help !
Trying to work out if I take a pension at 55 (would have been paid at 60 as it's protected) I will incur a 25% reduction in the annual amount.
Given I will be getting it 5 years early at what age would a higher figure paid from 60 catch up with the reduced figure (but pay 5 years earlier). Example I have been working on is the higher figure of £10,000 pa.
Thanks
Mike
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01-03-2017, 14:52
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#2
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Trollsplatter
Cable Forum Team
Join Date: Jun 2003
Location: North of Watford
Services: Humane elimination of all common Internet pests
Posts: 36,926
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Re: Calculation check
The magic figure is 15 years.
---------- Post added at 14:52 ---------- Previous post was at 14:47 ----------
If you retire 5 years early and get a 25% reduction as a result, they pay you £7,500 for life rather than £10,000. So by the time you reach the regular retirement age, you're £37,500 to the good. Thereafter, you continue to receive £7,500 per annum where you would otherwise have received £10,000, a difference of £2,500, so every year that £37,500 advantage is eroded at the rate of £2,500 per year. 37,500/2,500 = 15.
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01-03-2017, 15:39
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#3
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cf.mega poster
Join Date: Jan 2004
Age: 61
Posts: 2,242
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Re: Calculation check
Quote:
Originally Posted by Chris
The magic figure is 15 years.
---------- Post added at 14:52 ---------- Previous post was at 14:47 ----------
If you retire 5 years early and get a 25% reduction as a result, they pay you £7,500 for life rather than £10,000. So by the time you reach the regular retirement age, you're £37,500 to the good. Thereafter, you continue to receive £7,500 per annum where you would otherwise have received £10,000, a difference of £2,500, so every year that £37,500 advantage is eroded at the rate of £2,500 per year. 37,500/2,500 = 15.
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Thanks for this so 75 is the magic number.
Hopefully live that long
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01-03-2017, 15:52
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#4
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Dr Pepper Addict
Cable Forum Team
Join Date: Oct 2003
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Posts: 27,717
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Re: Calculation check
I did the same calculations on one of my pensions (took it at 51).
If I live past 73, then I will technically be a bit worse off than if I'd waited until I'm 60.
However, I decided I'd rather have the money now.
I may not live that long, and its worth more to me now than in 18 years time.
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