In the past, people would retire as soon as they were able to claim their pension. Everybody was counting down the days until they didn’t have to get up in the morning anymore, but things are a little different these days. The retirement age is already increasing and it’s getting harder to get by on your pension alone, so a lot of people are deciding to wait a while until they take it.
If you can still stand it for a little while longer, you might decide to carry on working for a while. On the other hand, you might find other ways to earn money at home so you don’t need to take your pension just yet. The question is, why bother? What are the benefits of waiting to take your pension?
You Can Put More In
This is the most obvious reason to delay taking your pension. If you continue working or earning money from other sources for a while longer, you can put more into your pension. That way, you’ve got more money to use later on when you stop working or you need it for travel or whatever else you want to do. You could look into putting money into investments instead of your pension fund too. There are some great mobile investing apps that make it easy to get started, even if you don’t really know what you are doing. Taking that extra time to boost your retirement accounts can make it much easier to stay on top of your money later on. You’re getting extra money from your employer too, so you might as well keep taking those contributions for as long as you can.
You Get More Interest
It’s not just about what you put in there yourself, it’s about the interest you generate on the money. Even if you have stopped paying anything in, it’s still a good idea to sit on it for a while because you will keep generating interest. That’s just free money you can use later on, so if you don’t need to rely on your pension just yet, it pays to wait.
It Boosts Your Payments
People don’t always realize that your state pension payments are different depending on when you start taking it. If you draw it as soon as you are able, you’ll get the standard payments. But if you wait a while and take it later, the money is split over a shorter period, so you get higher payments. Delaying it for a matter of weeks could lead to a bigger payment and, in some cases, you might even get a lump sum.
Taking your pension at the right time makes a big difference to your finances. Obviously, if you need the money right away then take it. Don’t land yourself in a tricky position just because you want to build up some extra interest. However, if you are in a position where you can wait, it’s worth holding off, even if it’s just for a few months.