How early can you retire?

This content was reviewed and approved by Marc Perry.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

Early retirement for many is a dream, whether it’s about travelling, financial freedom, or just reclaiming your time. However, making that dream a reality isn’t always as simple as people often think.

So, how early can you retire and leave your working life behind? We’ll explore your options so that you can start planning for a comfortable retirement.

Early retirement key takeaways

The UK no longer has a default retirement age, but early retirement usually means stopping work before the State Pension age (66, rising to 67 by 2028). You can access private and workplace pensions from age 55 (57 from 2028) and technically retire at any age if you’re financially prepared. 

Key steps covered in this article include:

• Paying off any outstanding debts.
• Estimating your expenses and living costs.
• Calculating retirement income.

Planning is essential – financial advice can help you retire with confidence. 

What is considered early retirement?

Early retirement used to mean someone retiring before the State Pension age, which is currently 66 and is set to rise to 67 between 2026 and 2028. Receiving a State Pension was often seen as the moment someone stepped back from full-time working duties, and it’s why many people regard it as their point of retirement.

However, retirement has become more flexible over time. While you still have to wait until your mid-sixties to receive your State Pension, you can start drawing your private and workplace pensions from the age of 55 (rising to 57 from April 2028) – often recognised as early retirement. 

At what age can I retire?

You can retire at any age, but most people retire at around 65. Data from the Institute of Fiscal Studies (IFS) suggests that people expect to retire between the ages of 66 and 69.

Retirement age doesn’t often account for ill health retirement or retirement to care for family members. Instead, you might consider your retirement as the age at which you stop working and stop making National Insurance contributions towards the State Pension. Whatever your circumstances, you’ll need the finances in place so you don’t need to work.

In this guide, we’ll consider that retirement means financial independence. If you’re thinking of early retirement, seeking professional financial advice can help you plan for the future.

Can I take early retirement?

Retiring early requires you to have sufficient money, whether that’s through pensions, investments, savings and other retirement products such as:

• Pension annuities: Where you receive your pension fund through regular, guaranteed payments for either a fixed term or the rest of your life.
• Equity release: Where you unlock the value of your property and turn it into tax-free cash. There are different types of equity release, the most common being a lifetime mortgage. 

Early retirement means that you’ll have the money coming in to cover your expenses, as well as enough for a rainy day. Perhaps you want to have paid off any long-term or large debts as this will reduce your fixed outgoings. This includes your mortgage if you are a homeowner.

If you are looking to retire early, the following steps will help you figure out how much money you need to retire and what you need to do to meet your financial goals: 

1. Pay off debts and mortgages. Rather than building up savings, focus on reducing the amount of debt you have. This way, you can ensure that you have as few fixed outgoings as possible. If you have a mortgage, work to pay this off sooner, but check with your mortgage provider to ensure you’re only overpaying an amount that you won’t be charged for.

2. Work out how much money you’ll need. By and large, your basic expenses won’t change too much as you get older. You’ll still need to pay for food, utilities, and housing-related costs, even if it isn’t your mortgage. You can deduct workplace expenses such as commuting costs from petrol as well as work clothes. By calculating what your essential spending is, you’ll be able to see what you’d need to retire successfully.

3. Estimate your additional spending. As well as the money you need to live, how much do you want to allocate to leisure pursuits and other activities? Whether this is a holiday a year, maintaining a hobby, or gifting money to loved ones, having a sum set aside for discretionary purchases is important.

4. Calculate your approximate total costs. Adding together your essential costs with your discretionary budget and multiplying it by the number of estimated years you’ll be retired for, will give you a total sum to work towards. Remember though, that this doesn’t account for inflation or any major life changes such as children, partners, or ill health.

5. Figure out your approximate income. Whether that’s pensions, annuities, equity release, or other sources such as investments, understanding how much retirement money you’ll have is important. Our annuity calculator helps you work out what your pension income could be if you decide to retire early.

Once you’ve considered all these aspects and understood your financial health, you’ll have a clearer picture of what’s needed for you to retire.

What are the pros and cons of early retirement?

Early retirement offers untold possibilities when you stop working. You’ll have the freedom to pursue your interests, try new things, travel the world or move home. But without regular contact with your former colleagues, early retirement can also leave you feeling lonely and isolated. 

There are pros and cons to retiring early, and it’s important to understand all the facts.

Advantages of early retirement

• You can take life at a pace you want, rather than needing to work to someone else’s schedule.
• You can pursue passions or hobbies you may not have previously had time for.
• Spend time with loved ones and those special to you.
• Make the most of the time you have.

Disadvantages of early retirement

• You may not have the funds to do everything you want.
• Retirement can be lonely, so you may find yourself feeling isolated.
• Circumstances can change quickly, and you may not have the funds to react.

Talking to loved ones and seeking financial advice can help you achieve a smooth transition to retirement. That way, you’ll be able to reach your retirement goals and ensure you’re financially stable for the years ahead.

Can you still work in early retirement?

Absolutely! Working in retirement can boost your retirement income, keep you active and can be good for your health and wellbeing. Many people take up smaller jobs that are less career-focused to top up their early retirement income and retain social ties. Whether it’s working in a café, doing an admin role, or even being a consultant in your previous area of expertise, you can take a job doing something you enjoy.

However, if you’re over State Pension age, you usually stop paying National Insurance, but you may have to pay tax on any retirement income over the threshold if you continue working. That’s why it’s important to weigh up your options before returning to work after taking retirement.

Can I take early retirement? It’s all in the planning

To make early retirement successful, an element of planning is essential. A financial adviser can help with this and suggest ways that could help you save for early retirement, if that’s your goal.

By planning financially, you can relax into retirement knowing that you have the funds to see you through, no matter what happens.

LV= offer a retirement advice service

We’ll help you to tackle retirement with confidence, no matter what your plans are. We can help you to see how hard your pension could work for you and where you could get income from. Why not speak to one of our expert advisers today on 0800 032 9301? Or, request a callback at a time that suits you.