Thought about delaying taking your pension?
Your very last day at work might seem like a very long way off but working into your 60s and 70s is fast becoming a reality. However, the longer you work, the more money you could save for later life.
Retirement ages are already increasing and the current State Pension age for men and women is 66, rising to 67 by 2028. What’s more, the earliest age that you can have a pension paid (except in ill-health) is currently 55 years old. The Government confirmed in early September 2020 that this will rise to age 57 from 2028.
We’ve got four reasons why you might benefit from working just a little longer:
- The money will have more time to grow – if you keep adding to your pension pot, there’s more time for it to make money when it’s invested. You may even benefit from compound interest. This refers to the principle that when you save money, as well as earning interest on the savings, you also earn interest on the interest itself.
- Your employer will keep paying in – should you stay working, your employer is required by law to keep paying into your pension through auto-enrolment.
- Free money from the Government – whilst you keep paying in, you’ll receive money from the Government on top of what your employer pays. Basic rate taxpayers get top ups of 25% which means for every £100 that is paid in, HMRC effectively adds another £25.
- Deferring your State Pension could help – if you delay taking your State Pension, you could get a higher weekly amount and the amount you qualify for depends on when you reach your State Pension age.