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How to Retire Early UK top tips

Find everything you need to know about early retirement - including how to plan financially - with our tips on how to retire early in the UK.

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Hobbies and interests
Posted 10 February 2023
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What is early retirement?

Early retirement means leaving a job prior to your mid-60s, on your own terms, to pursue your own interests. It’s about achieving the freedom of financial independence and requires serious planning: you’ll need enough income to live on for several decades. But it doesn’t necessarily mean giving up work entirely. In fact, many retired people can, and do, continue working after retirement, perhaps in a new field or with reduced hours.

What age can you take early retirement?

To count as an ‘early’ retirement, you’ll want to retire before the state pension age – currently 66. Nowadays the rules around retirement are more flexible than ever. While there are still roles that demand compulsory retirement, in most cases people can work for as long they like with no forced retirement age. The downside is that there’s now a longer wait for the state pension and it is set to rise to 67 and then 68 in the coming years – this may make early retirement even more appealing. To mitigate the longer wait, you can now cash in your private pension at 55, making this a popular age to retire. But this would mean you’ll derive less income than if you leave your pot to mature for longer. Of course, there’s no actual minimum age for early retirement. It all comes down to what you can afford.

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Can you retire early?

Whether you can retire early depends heavily on your finances. The earlier you start financial planning for retirement, then the earlier you’ll be able to afford to retire. You need to take an in depth look at your assets to work out how much income you’ll require to live on – and how you can secure it. Bear in mind that if you take early retirement, you may not contribute enough to your state pension to claim the full amount when the time comes. Our five tips will help you to create your plan:  

How to retire early – five top tips

1. Add up your assets

If you’re looking at how to retire early, the first step is to find out the value – and projected income – of your existing assets so you know exactly what you have and what you need to aim for. Assets include private pensions and savings but also investments and the value of your home - plus any other properties – not including mortgage debt.

2. Build strong savings

It's never too early to save for retirement but your first focus should be on repaying your debts. Start by clearing outstanding credit card debts – these probably cost you the most in interest. Then, as your mortgage is likely to be your biggest debt, aim to pay it off as soon as possible through monthly overpayments. Do check your mortgage lender’s terms and conditions first though. You may only be able to pay back a certain amount in a year to avoid punishing fees. Once you’re debt free, save as much money as you can afford in high interest accounts or bonds.

3. Cut back on costs

If you want to save more for the future, then you might need to think creatively about ways to cut your current spending. Can you buy – or sell - your clothes on vintage websites like Vinted instead of buying new? Can you swap your favourite brands for supermarket own, batch cook or use a slow cooker to save on your weekly food shop and bills? Or, if you want to save considerable sums, think about moving home. Downsizing your property can be one of the most effective ways to cut your living costs and may also release money held in equity. Low maintenance and energy efficient, a move into one of our retirement apartments for the over 60s could save you thousands of pounds a year in things like utility bills.

4. Calculate future expenditure 

To understand how much you’ll have to save for an early retirement, you need to work out the minimum income you can live on. Consider your essential budget: things like utility bills, food, toiletries, clothes, insurance and running a car. Then think about the luxuries that will make you happy in retirement. These include things like holidays, funds for hobbies, days out and restaurant meals. You’ll also need an emergency budget to cover unexpected repairs and maintenance – for instance, in case your washing machine breaks down. And, you’ll need to think about covering the cost of inflation.

5. Finalise the figures

You should now have all the facts and figures at your fingertips to be able to understand your projected income at your chosen retirement age - and a good idea of whether you can afford to retire early with the lifestyle you’d like. Even if your finances are in good shape, there are risks involved – for every year you don’t work, you’ll lose not only that income, but also the ability to save and add to your pension pots. It’s wise to talk your options through with a trusted Financial Advisor to ensure your plan is robust before taking the plunge.

Enjoy a relaxing retirement with McCarthy Stone 

Whether you plan to retire early, or not, McCarthy Stone’s luxurious retirement villages and communities for the over 60s provide the ideal environment to enjoy stress-free living. And with retirement housing options in sought-after locations across the UK available to buy, rent or part buy, part rent, you can find the perfect retirement home near you now. Alternatively, if you’re planning ahead, why not browse our coming soon developments?

Any questions about our gorgeous retirement homes for sale or rent? Contact us or call our friendly team on 0800 201 4811

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