Financial advice
Our articles offer tips on financial planning for retirement, including a guide comparing the cost of care homes with independent living and assisted living.

Different types of retirement

Did you know there are four types of retirement? From traditional to temporary retirement, find out the differences in McCarthy Stone’s expert guide.

a few women having a conversation
Financial advice
Posted 13 June 2024
Share this article:


What are the 4 types of retirement?

Retirement is changing. What used to be a clear transition from working life to a life of leisure has become more complicated, with multiple types of retirement on the table, including early retirement, traditional retirement, semi-retirement and temporary retirement. This article explains the different types of retirement, what they mean and the benefits —or pitfalls, so you can make a retirement plan that suits you.

What is early retirement?

Early retirement means retiring earlier than the traditional retirement age. It usually means retiring in your 50s on your own terms to pursue your own interests. Many people retire at 55, as this is the age when you can cash in your private pension fund. Early retirement requires serious financial planning and can negatively impact the amount you get in your state pension as well as lowering the amount of private pension you’ll receive each year. Read our guide on how to retire early.

What are the pros and cons of early retirement?


The pros of early retirement are that you are in charge of what you do. You can travel, spend time with friends and family, get fit, volunteer and start new hobbies.


If early retirement sounds tempting, the reality might be slightly less rosy. As well as potential financial challenges, without a clear sense of purpose it can feel overwhelming. Read about our five emotional stages of retirement to see if you’re ready.

a person sitting in a chair by a pool with a straw hat

What is traditional retirement?

A ‘traditional retirement’ means working until state pension age, currently 66, and claiming any private pension at that point. However, according to Insurance Hero, in February 2024, the average age for men to retire in the UK is 65 while the average age for women to retire is 64. With the state pension age set to rise again in the near future, more and more people will be considering retiring before the official state pension age and will need to plan accordingly.

What are the pros and cons of traditional retirement?


It is in many ways the most straightforward option and combining your state pension and private pensions will maximise the amount of money you have to live on.


If your job is very stressful or physically demanding, will you want, or be able, to work full-time into your late 60s? You may want to consider semi-retirement if you can’t retire fully.

What is semi-retirement?

Semi-retirement is when instead of stopping work completely, you lower your hours either as part of your existing role or by taking on a less stressful (and possibly less well paid) job somewhere else.

If semi-retirement means a drop in pay then again this will take some financial planning. You may find that if you’ve paid off your mortgage, and/or your children have left home, you still make enough for you to live on—and you can continue to add to your pension pot too. Alternatively, if you are over 55, you could use some of your private pension to supplement your income.

What are the pros and cons of semi-retirement?


Semi-retirement allows people to retain their sense of purpose and enjoy the social rewards of working for longer as well as making money and having more time for leisure.


Your time is still restricted and if you draw some of your pension early, as well as impacting future income, you may find yourself paying tax on your pension if your total income goes above the tax free personal allowance which is currently £12,570 a year. You can however take a lump sum of 25% of your fund value out of your pension without it affecting your personal allowance.

What is temporary retirement?

Temporary retirement means stopping work altogether for a period of months or even years before restarting again, either in the same career or in a new one. Like semi-retirement you can fund your lifestyle independently, perhaps using savings, or if you are over 55 you could claim some of your pension.

What are the pros and cons of temporary retirement?


Temporary retirement allows you to enjoy the freedom of life without work obligations for a period of time, giving you the opportunity to travel the world or immerse yourself in a new skill. It can also give you time to reassess your career, try something new or set up a business. Find inspiration for retirement jobs.


While temporary retirement gives you the ideal opportunity to try out retirement living, it still has to be fully costed and plans for returning to work may not work out as expected.

a man looking at a plant

How to choose the right retirement option for you

Whichever option you choose for your retirement you need to ensure you plan appropriately considering your current financial situation (including savings, pensions, and any outstanding debts or obligations), your health, well-being and family situation, as well as your personal preferences and retirement goals. Read our guide to financial planning for retirement.

How can a retirement community benefit your retirement?

Did you know you don’t have to be retired to live in a McCarthy Stone home? Many of our homeowners continue careers, from acting to advising on education for years after moving in. But life in a retirement village or development can bring tonnes of benefits to support you whether you choose to work or not, with amenities and services to make life easier and a friendly community on tap.

Not only that but moving to a retirement community can free up money—by releasing equity through downsizing to a smaller home or choosing an affordable alternative to buying outright like Shared Ownership or renting. What’s more you can save money on the cost of living through cheaper bills and lower maintenance costs. And McCarthy Stone’s Entitlements Manager can even help ensure you are getting all the money you are entitled to from the government. Find out more about how McCarthy Stone can help with the practicalities of retirement planning.

Retire your way with McCarthy Stone

Choose from retirement apartments and bungalows set within vibrant and sociable communities in coastal, city or countryside locations. Search for a retirement home near you today.

Got a question? We’d love to hear from you. Send us a message online or call our friendly team on 0800 201 4811 today.


Share this article:

Stay in the loop

Keep updated on news, events & exclusive offers

We need your email to complete your request but you can unsubscribe from updates at any time.