What’s stopping you from retiring sooner? For many, it’s not just their finances but also their mindset. If the excitement of early retirement is mixed with nerves, having a solid early retirement planning strategy could give you the confidence boost you need to step back from work.
While financial concerns may cause hesitation, some people are financially ready to retire but still worry about taking that next step. It’s understandable – early retirement can represent a significant lifestyle change.
So, how could early retirement planning help you retire sooner? It may provide the confidence boost you need to begin the next chapter of your life.
A retirement plan starts with setting out your goals
If you had more free time, how would you spend your days? Early retirement provides a wonderful opportunity to reflect on what truly makes you happy and to shape a lifestyle centred around those activities.
By outlining how you’d like to spend your time in retirement, the transition can feel less daunting, making the shift to this new phase of life much smoother.
For some, this might mean embracing a slower pace of life now that you’re no longer tied to a work schedule. For others, keeping your days full with activities and plans could be more appealing – it’s important to think about what works best for you.
You may be looking forward to spending more time with your grandchildren during the school holidays, or perhaps you have plans to transform your garden.
In addition to your day-to-day lifestyle, you may want to consider one-off experiences you’d love to incorporate into your early retirement plan. Perhaps you’ve always dreamed of taking a cruise to Alaska, enrolling in a university course, or training for a marathon. Now could be the perfect time to think about those things you’ve always wanted to try but have put off due to time constraints.
While planning your retirement lifestyle may be the push you need to leave work behind, the financial aspect of retirement can still be a concern for some. Fortunately, once your goals are set, you can begin to calculate how much you’ll need to secure the retirement you desire and assess whether you have “enough” to make it happen.
Most people retire between the age of 55 and 65
According to a report from the Institute for Fiscal Studies, most people retire between the ages of 55 and 65. At age 55, 81% of men are in paid work, and this figure falls to 44% by age 65. For women, the employment rates fall from 74% to 34% over the same ages.
This means many people are retiring before the State Pension Age, currently 66 and gradually rising to 68. If you’re aiming for early retirement, you’ll need to consider how to utilise your assets to cover your expenses in the initial years.
Even once you reach the State Pension Age, the income from the State Pension alone may not be enough to cover all your costs. In 2024/25, those eligible for the full new State Pension will receive approximately £11,500 per year.
As a result, your early retirement plan will likely need to factor in ways to supplement the State Pension throughout your retirement.
Understanding how to create a sustainable income in early retirement can be challenging, with many factors to consider, such as longevity and the impact of inflation on your income needs.
A financial plan tailored to you and the lifestyle you envision in retirement can help you assess how to generate an income and how your wealth may evolve over time. Having a financial plan you can trust could provide the peace of mind and freedom to fully enjoy your early retirement.
Contact us to talk to us about your aspirations for retirement
If you’re considering early retirement and feel a confidence boost would help, we’re here to assist. We’ll work with you to create a tailored financial plan that aligns your retirement goals with your financial situation. Get in touch today to arrange a meeting with our team.
Please note: This blog is for general information only and does not constitute advice. The information is intended for retail clients only.
A pension is a long-term investment that is typically not accessible until age 55 (rising to 57 from April 2028). The value of your pension fund can fluctuate and may decrease, affecting the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
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