A useful trick for boosting your pension

Delaying drawing on your state pension can boost your retirement income. Merryn Somerset Webb explains how.

Times are tough for anyone looking for a decent income in retirement. But there is one small way to give your pension a nice boost that most people completely miss. It is to delay taking your state pension. Over 90% of those entitled to a state pension start drawing it the second they can. On the surface, this makes complete sense. After all, if you think you have been paying into a system for 40 years, you want to get as much out as you can.

But it could be a mistake. Why? Because the longer you can bring yourself to wait, the higher your eventual pension will be. For every five weeks you delay, your payment will go up by 1.01%. Put it off for a year, and you will get an extra 10.4% a week until you die. Go further, says Norma Cohen in the Financial Times, delay taking it from 65 to 70, and you do rather better.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.