Hi everyone. I'm hoping that someone who is good at maths can help me here please. I have just turned 55, and can now take my private pension should I wish. I no longer work at the company it's with (I am now self employed).
I've seen all the figures, and as you would expect, the later you take it, the larger the sums become. But I've been using a compound interest calculator, and it looks to me, like I can get the best return on the money, if I take the lump sum now and invest it, and add the monthly payments to the same account. But I'm not the best at maths and would love some second opinions please!
The figures are as follows :
Pension pot = £308,646
Age 55 : I can take £67,866 lump sum & £848 pm
Age 60 : I can take £95,089 lump sum & £1037 pm
Age 65 : I can take £119,547 lump sum & £1371 pm (after tax)
I realise that once the pot is empty, that my monthly payments will stop. By my calculations, that would make me between 75 & 78 years old.
Running these figures through a compound interest calculator, it seems to me, that I am better off taking it now and investing, because if I opened an account now and invested £67,866, and added £848 to it every month, then by the time the pot runs out, I would have £472,516.
Whereas, if I waited until 65, and invested the lump sum of £119,547 and then added £1371 to that account monthly, then by the time the pension pot runs out, I would have £353,375 in the account.
I have used 3% as the interest rate, which seems quite conservative.
I realise that this is perhaps simplistic.
Can anyone tell me if I am talking sense, or point out anything I am not getting?
Thank you!!