Early retirement can seem like a great idea, but it’s not an easy decision to make. There are a lot of things to consider when retiring early. You’ll need to:
Once you’ve worked through that, you’ll have a rough idea of how much you’ll need, for how long, to support your retirement. That’ll help you see if you’re:
Understanding how much your retirement income will be could help you work out what age you can retire. Our Retirement Income Calculator can help.
That’s a lot to think about! And there’s no one-size-fits-all answer. Everyone will have their own unique take on it. So the answer to: “Should you retire early?” is really: “Well, assuming you can afford it, do you want to and what will you get up to?”
When you’re thinking about whether to retire now or later, bear these key early retirement benefits in mind. You can:
Whether or not you can retire early often depends on the pensions you’ve built up.
Normally you can’t access a personal pension, workplace pension or other type of pension before you reach 55. But there are exceptions. Check with each of your providers to see what’s possible. You might be pleasantly surprised. And even if you need to wait until your mid-50s, that’s still early retirement.
Don’t forget to plan carefully, though. The sooner you start drawing money out of a pension, the less it can keep growing, and the more likely you are to use it up more quickly. Make sure you think through the whole of your retirement, not just the next few years.
There’s also your State Pension, but that won’t kick in until you reach your mid-to-late sixties. You can check the exact age you’ll get it at Gov.uk. Because the State Pension starts later on, it won’t help you retire early. But you can factor it into your long-term spending and saving plans.
We often build our lives around work, scheduling everything else around its needs and demands. Our sense of who we are and what we want out of life can too easily get mixed up with job titles and achievements. Taking early retirement can help us step back and start living on our own terms.
And retirement’s a very flexible thing these days. The benefits of saving for retirement early can be surprisingly varied:
You’re probably already imagining your ideal retirement, and mulling over lots of possible plans. Starting on them sooner rather than later could be very exciting – particularly if you’re not sure how healthy you’ll be further down the line.
But don’t go too quickly. Early retirement factors include challenges, too. For the most part, they’re financial. If you retire early, you might use up your pension pot too quickly. So make sure you plan carefully, and are ready for the medium to long term, as well as the short term.
There are many different ways of seeing if you’re ready for early retirement, and working out what that retirement could look like:
Some early retirees can collect unemployment benefits, if they’re eligible. Whether or not you can do so, will depend on a number of factors, including:
The Gov.uk Early retirement, your pension and benefits page will help you see what you could get.
Yes. You still have to pay National Insurance on money made through employment or self-employment. You only pay National Insurance until you reach State Pension age. And you only pay it on any money you make over a fixed minimum amount.
How much you lose when you retire early depends on:
That makes it a very difficult question to answer. If you’re thinking about early retirement and not sure how much you might lose, it could be worth talking to a financial adviser. They’ll help you think through the potential costs of early retirement, and see if it’s the right decision for you.
Yes, you can retire early and still work. But getting paid might have an impact on any means-tested benefits you’re eligible for.
No, you can’t retire early on your State Pension. You can only start taking it once you reach your mid-to-late sixties. You can check your State Pension age.
