Retirement is the culmination of decades of hard work. While you might have your final day at work all planned out, who hasn’t also dreamed about retiring early?
It can leave you with more time to enjoy the things you love and at a time when you are better able to enjoy them. But it is also more expensive – you’ll need to maintain your desired retirement lifestyle for longer.
For some, the current cost of living crisis might have made early retirement impossible, for others, rising bills could’ve made it appear like a necessity.
Whether you’re looking forward to indulging in a hobby for longer or simply withdrawing cash to make ends meet, you’ll want to be sure you can afford it and that early retirement is the right decision for you.
Here are some important factors to consider.
If you can afford it, early retirement can be a great option
A recent LV= survey of 4,000 UK adults found that 47% of retired responders – that amounts to 6 million pensioners – retired earlier than planned. Of those, 25% retired at least five years before their original retirement date.
For those that could afford it – around a third of those surveyed answered that they could – this is great news.
Maybe you want to travel the world. You might:
- Travel on the Orient Express
- Visit the Seven Wonders of the World
- Go on a safari.
Equally, you might want to stay closer to home, maybe you plan to:
- Start your own business based on a lifelong passion
- Indulge in a hobby that you didn’t have time for while working
- Spend more time with your grandchildren and extended family.
Early retirement could allow you to enjoy these pursuits while you are still in peak health. If you’d like to discuss retiring early, you’ll want to seek professional financial advice first so be sure to contact us before committing to a decision.
Around 30% of those who retired early couldn’t afford to
Early retirement won’t always feel like a choice. Some common reasons for early retirement given by responders to the LV= survey included:
- Illness
- Stress
- Redundancy
In total, 30% of early retirees stated that they were not in a good financial position when they opted to leave work.
A diagnosis of ill health or an injury (either their own or a partner’s), concerns about their mental wellbeing, and redundancy topped the list of reasons. But some also admitted to retiring because they disliked their boss.
Looking after your physical and mental wellbeing is vital at every stage of life but retirement decisions can have huge consequences and be long-lasting.
The Pensions and Lifetime Savings Association (PLSA) recently conducted its own survey. It looked specifically at the influence of the cost of living crisis on UK adults’ pension decision-making.
It found that 20% of pension scheme members have stated they want early access to their pension (after they reach the current minimum retirement age of 55). Of the pension schemes questioned, encouragingly, 19% reported an increase in their members seeking professional advice.
Seeking pension advice is crucial at each step in the process
Your pension contributions are part of a long-term financial plan designed to maintain your designed standard of living once you leave work.
While the economic and geopolitical landscape might change, your lifetime goals, once formed, will likely stay roughly the same. This means that your financial plan can stay the same too.
The decisions you make at retirement will affect the rest of your life but don’t be rushed into making any pension choices.
At Globe, our expert team has decades of combined experience and can help you to make the right decision for you. We not only help you to put a long-term financial plan in place, but we track its progress regularly to ensure you are on track.
If you decide you want to retire early, we can review and revisit your plan to help you find a way to make that happen. Likewise, if you don’t want to retire early but feel like outside factors are forcing your hand, we can offer reassurance and help you to realign your budget.
Either way, we are here for you so be sure to contact us.
Get in touch
If you have any questions about the current cost of living crisis or your long-term financial plans, please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you.
Please note
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.
