{"id":907,"date":"2019-06-21T12:04:58","date_gmt":"2019-06-21T11:04:58","guid":{"rendered":"https:\/\/evolvemyretirement.com\/blog\/?p=907"},"modified":"2019-06-21T12:04:58","modified_gmt":"2019-06-21T11:04:58","slug":"make-state-pension-go-further","status":"publish","type":"post","link":"https:\/\/evolvemyretirement.com\/blog\/make-state-pension-go-further\/","title":{"rendered":"Make Your State Pension Go Further"},"content":{"rendered":"\n<p>For those currently retiring the state pension stands at \u00a3168.60 per week, or \u00a38,767.20 per year. Most would agree that this is not nearly enough to live on. Someone on minimum wage working a 40-hour week earns over \u00a317,000. In other words, the state pension is around half the minimum wage.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Deferring your state pension<\/h2>\n\n\n\n<p>Rather than taking your state pension as soon as you become eligible, <a rel=\"noreferrer noopener\" aria-label=\"you can choose to defer it (opens in a new tab)\" href=\"https:\/\/www.gov.uk\/deferring-state-pension\/what-you-get\" target=\"_blank\">you can choose to defer it<\/a>. The longer you defer it, the more you&#8217;ll get. It increases by 1% for each complete 9 weeks you defer. This works out at about 5.8% for each year of deferral. Of course if you defer it you\u2019ll need to live on something else instead. Let\u2019s see what that might mean.<\/p>\n\n\n\n<p>Say you decide to defer by 5 years. Then at retirement you\u2019ll receive \u00a311,300 per year, ignoring inflationary adjustments. So to replace the missing \u00a311,300 over the next 5 years you\u2019d need to have saved about 5 times that amount, namely \u00a356,500.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is deferral worth doing?<\/h2>\n\n\n\n<p>So saving \u00a356,500 enables you to \u2018buy\u2019 roughly an extra \u00a32,532 a year of guaranteed income. That\u2019s equivalent to buying an index-linked annuity returning 4.5% per year. That\u2019s a far better rate than you\u2019d get buying an actual index-linked annuity, where the rate would be more like 2.7%. It\u2019s also more than a typical safe drawdown rate, <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/evolvemyretirement.com\/blog\/4-percent-rule\/\" target=\"_blank\">often believed to be 4%<\/a>.<\/p>\n\n\n\n<p>So on the face of it, deferring appears good value, at least in the above example of deferring by 5 years. Is there a downside? Possibly. If your health is worse than average there\u2019s an increased chance you won&#8217;t live long enough to reap the benefits.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Should you defer?<\/h2>\n\n\n\n<p>Each person\u2019s situation is unique, in terms of both finances and health. Also income tax considerations affect the calculation, although usually in a way to make deferral even more attractive. You can use our unique <a href=\"https:\/\/evolvemyretirement.com\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"retirement calculator (opens in a new tab)\">retirement calculator<\/a> to try out various possible combinations of retirement date and increased pension. We recommend that you consult an independent financial adviser before actually deciding to defer.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>For those currently retiring the state pension stands at \u00a3168.60 per week, or \u00a38,767.20 per year. Most would agree that this is not nearly enough to live on. Someone on minimum wage working a 40-hour week earns over \u00a317,000. In<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":847,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[5,13],"class_list":["post-907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-retirement","tag-state-pension"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Make Your State Pension Go Further - EvolveMyRetirement<\/title>\n<meta name=\"description\" content=\"How can you make your state pension go further? 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