This is something of a ‘moving feast.’ With the maturing of the ‘Baby Boomer’ generation – that is people born between 1946 and 1964, in the post war years, there are now more people aged over 60 in our population than there are under 16’s.
With this in mind, life expectancy has also increased and we’ll all spend a larger proportion of our adult lives in retirement than previous generations.
There are two types of state pension, which applies to you depends on whether you reached state pension age before the new state pension came into force – the new state pension and the old basic state pension.
This is a regular payment from the Government based on your previous National Insurance contributions and you receive this if you reached state pension age on or before April 2016 – that is, if you are a woman born before 5 April 1953 or a man born on or before 5 April 1951.
The basic station pension includes two parts:
The new state pension is a regular payment from the Government that most people can claim in later life. You can claim this at state pension age if you have at least 10 years National Insurance contributions and are:
In April 2023, the full state pension went up to £203.85 a week and whether you get the full amount depends on your qualifying years of National Insurance payments.
There are a number of pension income calculators online – have a look at www.agepartnership.co.uk or www.gov.uk – to check your state pension. There is an online form that you can send to the Department of Work and Pensions and they will send you a letter confirming the amount of pension you should receive.
The answer to this is ‘no.’ You should receive a letter about two months prior to your 66th birthday and you must confirm that you wish to claim your pension.
Yes, you can claim your state pension and keep working – but bear in mind:
Do seek advice from a pensions specialist but we believe that any pensions specialist will generally tell you not to defer your state pension.
If receipt of your state pension will push you into a higher tax bracket, it may be possible to set up a personal pension plan and pay your state pension into this. You will be able to draw money from this when you need to do so – particularly when you decide to stop working. You will be able to withdraw money up to a certain amount without having to pay tax on it. Another benefit of doing this is that if you die, your heirs will inherit the money from the pension plan.
Just because you won’t get a state pension, it doesn’t mean you can’t retire. Personal and workplace pensions can usually be claimed from the age of 55. If your pension is enough to fund your retirement, then you’ll be able to retire early.
If you retire at 55, assuming you have an average life expectancy you will need your assets to produce an income for a longer period than someone who retires later – so retiring early means you need to have other sources of income you can use.
You can claim your pension if you continue to work – if you do decide to defer your pension until you stop working, then you’ll receive larger pension payments when you do claim – but do speak to a pensions advisor as previously mentioned as this may not be the best course of action.
If you’re looking to claim a personal or workplace pension while working, other rules may apply – and this could depend on the terms of your workplace pension you agreed when signing up.
Again, this depends on you and your personal circumstances. You need to think about basic living costs – mortgage if you’re still paying one, service charges, hobbies, travel, car or home repairs and long-term health care.
“One suggestion is that you’ll need 70% of your pre-retirement income to live comfortably.”
The Money and Pensions Service is an independent organisation that gives free information and advice on pension planning, including state, personal, workplace and stakeholder schemes.
With properties for sale across the south of England, we have luxury retirement homes in several of the most desirable towns and cities.
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