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“Can I Afford to Retire Early?”

As a Chartered Financial Planner, this is a question I’m asked frequently – whether I’m speaking with a new client, or out with family.

Early retirement is a popular subject for daydreams and discussion, after all.  Many people yearn to give up work while there’s still enough time to enjoy life whether you want to retire at 62 or retire at 55, this is where a Financial Adviser can help you assess your options and make a plan to help you make your dream a reality. 

What would you do with early retirement?  Spend more time with your family, perhaps travel the world, or indulge in a hobby you’ve always wanted to try?

‘Early retirement’ means many different things to different people. So you may not be surprised to learn that there is no simple, one-size-fits-all answer to the question of when you could personally afford it.

Retirement on your own terms

When people ask if they can afford to retire early, that often isn’t the question they’re really asking.

What they mean is: “Can I afford to do something other than the work I’m doing now?”  Rather than suddenly giving up work for good, they’re searching for better work/life balance, which is a point I’ve explored in more detail (here).

Our conversation will then usually centre around these follow-up questions:

  • What does ‘retirement’ really look like for you?  Would you like to start a passion project, for example, or spend more time with your grandchildren?
  • Is this going to provide you with an income source? Are your plans financially viable, and do they need to provide an income?
  • Aside from your pension, are there any other assets to consider? Your pension isn’t the only route to retirement, although many of us have been conditioned to believe it is. This is why so many people approach me about retirement armed with their pension information, and nothing else.
  • Do you have cash that isn’t working for you?  You could also have some investments that haven’t been reviewed for a while, or a potential future inheritance to factor into the equation.
  • What secure income sources will you have, and when? For example, what will your state pension provide and when? Could penalties apply if you were to access your company pension earlier than your set retirement date?
  • Why do you want to retire early? While it’s often assumed that we’d all like to take early retirement given the chance, it’s also important to understand why you’d like to explore the opportunity now. If the reason is ill health, for example, there could be certain early access options for your pensions, or access to more attractive annuity rates than offered on the open market.

The answers you provide to these questions will be completely unique to you and your circumstances.  In other words, they are the reason why, in most cases, a quick and simple answer to the question, “can I afford to retire early?” doesn’t exist!

The good news is that talking about early retirement doesn’t need to be complicated.  I will happily discuss your ideas and answer your questions (and ask some of my own), to help devise a personalised, flexible retirement strategy that works with your lifestyle.

To find out more, please contact me to arrange a no-obligation chat.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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