How early can you retire?

5 minutes

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 present it to be.

While you can get your State Pension at the earliest at 66 currently, you can start withdrawing from your personal pension from as early as 55 (rising to 57 from April 2028). But what if you want to retire before that?

What is considered early retirement?

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

What age can I retire?

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

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 you stop working and enter what is stereotypical retirement, so having finances in place so you do not need to work.

In this guide, we’ll consider that retirement means financial independence.

How to retire early

Retiring early requires you to have sufficient money, whether that’s through pensions, investments, savings, retirement products such as annuities, equity release, or other sources. This means that you’ll have the money coming in to cover your expenses, as well as enough for a rainy day.

Many also suggest that retiring early means you’ll 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 what you need to do to get where you need to be financially:

  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 fun things? Whether this is a holiday a year, maintaining a hobby, or wanting to gift 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. In retirement, you will have some income as we mentioned above. Whether that’s pensions, annuities, equity release, or other sources such as investments, understanding how much money coming in you have is important.

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

Pros and cons of early retirement

Early retirement can be seen as a rite of passage, but it doesn’t mean spending every day on the golf course. 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

Can you still work in early retirement?

Absolutely! Many people take up smaller jobs that are less career focused to help top up their income sources. 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 want.

If you’re over State Pension age you usually stop paying National Insurance, but you may have to pay tax on any income over the threshold.

Early retirement is all about planning

The main point here is that to make early retirement successful an element of planning is essential. 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 friendly advisers today on 0800 032 9301? Or, request a callback at a time that suits you.