Early Retirement

Retiring early usually starts with understanding what you want your retirement to look like and how much you’ll need to fund it. Review your pensions, savings and investments, consider when you can access each source of income, and work out how long your money needs to last. It’s also important to factor in tax, inflation and unexpected costs. A clear financial plan can help you understand whether early retirement is achievable and what steps you need to take.

Taking early retirement doesn’t automatically mean you can or can’t claim benefits. Your eligibility will depend on your circumstances, the benefit you’re applying for and your income, savings and other assets. It’s important to understand how taking pension income could affect any entitlement you may have. If you’re considering retiring early, check your position carefully and factor any potential benefits into your wider retirement income plan.

It depends on what you mean by early, most private pensions can be accessed at age 55 (although this is rising to 57 from 2028 for many people), but state pension cannot be accessed until 67 or 68 depending on your date of birth. Defined benefits have a whole other set of rules, many having a set access age, and some which do allow early access but only for a decreased income. This is where advice can be beneficial, to ensure you’re not accessing anything earlier than needed and triggering penalties for it.

There’s no single amount that everyone should contribute to their pension for an early retirement. The right level depends on your age, income, existing pension savings, retirement goals and when you want to stop working. If retiring early is your goal, you may need to save more or make contributions for longer to build the fund you’ll need. Reviewing your pension regularly can help you understand whether your contributions are keeping you on track.