In the UK, there are no restrictions on retirement and you can access your pension pot and retire at 55 if you want to, although this will be increased to 57 from 2028 and likely for further increases in future years. How much you will need for your retirement really depends on the lifestyle you wish to live. A general rule is 20 times your expenses in savings/pensions, less any income from other sources.
We work with our clients to provide advice about how to start saving and investing. We can then work out if early retirement is possible for you. This is a dream that many people share because it allows you to enjoy life while you are still young, fit and healthy.
Retire at 55
In order to achieve this, you will need to know how much do you need to retire at 55, what is a good pension pot at 55 and will it give you the retirement you want to have.
No two retirements are the same. A good pension pot is the one that provides you with enough income to do everything you want.
How much income do you need in retirement
Answering this question, is the real starting place for retirement planning. Work out what do you currently spend each month and whether this is likely to change in retirement. Where possible split out your basic expenses versus your leisure expenses. Many people work on the 70% rule, that states the average retiree requires 70% of their normal working income.
How much income will I receive?
The money you receive during retirement will be from income and capital. Income includes payments from savings interest, dividends, state pension, rental income and any final salary pensions. Capital refers to cash or liquid assets. For now, you should get a list of all your different income streams so that you know your total ‘pot’.
To find out how much income you will receive, it can be worked out by your income and capital combined to fund your retirement expenses. This is the stage we work with our clients using cash flow modelling which creates forecasts of our client’s finances. The cash flow reports we create show whether you have enough money to retire at 55 or not.
If you don’t have enough money to retire at 55, don’t panic. We can provide you with options to help you bring forward the date you can retire. For example, you can save more each year, retire a few years later, spend less in retirement and we can provide you our top tips to help you achieve this.
To read more about retiring early read our tips for planning your retirement in your 50s.
If you would like to book an appointment with one of our advisers to discuss your plans for retirement, then please get in touch.
*Please note: A pension is a long-term investment not normally accessible until 55 (57 from 2028). The value of your investment (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.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.