Whether you are tired of working or want to relax somewhere on a beach, there are plenty of reasons why you might want an early retirement. However, retiring early in the UK is a decision that should not be taken lightly, as rushing into the process could leave you with less money in your later years. To find out how to retire early, as well as if you are financially and emotionally prepared, this guide could have the answers you need.
Should I take an early retirement?
It is not difficult to see why an early retirement is so appealing. After many years of working, your retirement gives you the chance to relax and devote time to other passions. But before you can think of retiring, you need to make sure that you are aware of the pros and cons of an early retirement.
Early retirement benefits
First things first, what is early retirement? The state pension age in the UK is 65, so an early retirement age could be anywhere from your late 40s to 50s. The main benefit of retiring at this age is that you have a lot of spare time to use in any way you wish. Balancing your work life with other commitments can get overwhelming, and you may find that you don’t have enough time to spend on yourself.
Retirement is the perfect outlet to explore new avenues and opportunities. From our retirement homes, you can spend time with your family, buy a pet, or pick up a new hobby – there is no limit to the things you can do when you retire.
For those with health concerns, an early retirement will be even more beneficial. In retirement, you no longer have to worry about the stresses of work life. If you suffer from ill health or a specific medical condition, you might even have the option to retire before the retirement age, while claiming your full pension.
To find out how to get early retirement on health grounds, you will need to ask your pension provider if your condition makes you eligible. Some pensions will let you access funds if you have to retire early for health reasons, but if not, you may need to consider alternative options.
Early retirement drawbacks
While an early retirement looks ideal on paper, this might not be the best option depending on your personal circumstances. In most cases, retiring early will mean that you will get a smaller pension than if you had worked up until the state pension age. With a state pension, continuing to work will mean that you accumulate more money through ‘qualifying years’. You also cannot get your full state pension until you reach 65.
Defined pension schemes are similarly based around the amount of years you spend working. A defined benefit pension will be bigger the more years you work, while retiring early with a defined contribution scheme gives you less time to put money into your pension.
Beyond issues of money, choosing to retire early will mean that you miss out on the benefits of work life. Your work life will have likely been a good source of community and mental activity, and you will need to find a new sense of purpose in your retirement life.
Best way to retire early
Ultimately, an early retirement will only be a good idea if you have your head and your finances in the right place. Be realistic and ask yourself, am I ready to retire? If you have a good plan in place for when you retire, retiring early could be the easiest decision you make.
Remove any debts
To financially prepare yourself for an early retirement, you will need to make sure that you have paid off any debts or mortgages. This is something that you will need to do before you start saving, as interest rates will hurt the amount that you can save.
Work out how much your retirement lifestyle will cost
If you have a particular image of how you want your retirement lifestyle to be, calculate how much money you need to make this possible. Work out how much you will get from your pension plan and how much you will spend per month. You can also use an early retirement calculator to assess whether you are financially on track for an early retirement.
Ease into it
If you think you might struggle to save up enough for an early retirement, you should consider asking your employer if you can work part time or flexible hours. As well as saving enough money to support your lifestyle, this is a great way of slowly preparing you for retirement life.
Feel like you are ready to enjoy an early retirement? Our Churchill retirement homes have everything you need to get started, with quality facilities and an active community to get involved in.