All About Early Retirement

As of 2024, the average retirement age in the UK is 64 for women and 65 for men. However, a recent study revealed that one in five young British adults expect to retire before the age of 60.
Taking early retirement is a lifegoal for many. For some, it’s the opportunity to travel and finally work their way through that bucket list, while for others it’s simply a time to relish bowing out of the corporate 9-5 world.

Whatever your post-work plans, our blog explores when you could retire; tips for retiring early; things to consider before you make a decision, and when you can claim your pension.

When to retire

In theory, you can retire at any age, although this will, of course, depend on your income.
Before you retire, it’s important to carefully consider your financial situation and understand exactly what money you’re entitled to.
Before retiring early, you’ll need to ensure that you have enough money in savings and pensions to sustain the lifestyle you wish to lead for the rest of your life. You should also consider the possibility of unexpected expenses, such as financial emergencies.

When can I claim my pension?

The type of pension you have will determine when you’re able to claim it.

1. State Pension
If you were born before April 5, 1960, you can claim your State Pension from the age of 66. For people born after this date, the State Pension age will rise to 67 between the years 2026 and 2028, and rise again to 68 between the years 2044 and 2046.
If you’re unsure, you can use the State Pension tool on the Gov.uk website to check your qualifying age - you’ll just need to provide your date of birth.
You won’t be given your State Pension automatically but will need to claim it yourself. You should expect to receive a letter no later than two months before you reach State Pension age, which will detail what you need to do next.

2. Workplace pension
Your workplace pension eligibility age will vary between providers. It is usually between 60 and 65; however, some workplace pension providers may allow you to claim from the age of 55. You should be aware that there may be a penalty for taking your pension early such as having to pay tax.

3. Private pension
As with workplace pensions, the minimum age that you’re able to access the money in your private pension will differ from provider to provider, but is generally around 55 years old. Please note that some providers may require you to be 60 or 65 before you can claim your funds.

Retirement calculator

‘How much pension do I have?’ is possibly one of the first questions you’ve asked yourself when contemplating early retirement.
MoneyHelper has put together a handy pension calculator that can help give you an idea of how much money you might receive from your pension payment(s).

How to retire early

• Work out how much money you’re going to need, either as a monthly or annual figure. At the very least, you should make sure that you’re able to cover essentials, such as bills and food. You may also want to factor in the cost of leisure activities and socialising – after all, these are the things you’ve worked hard to enjoy!


• Re-adjust your budget.Financially adjusting to retirement can take some getting used to. Making a retirement budget plan could help you get to grips with your new circumstances, and you can use online budget planners, like this one, to get started.


• Look at your borrowing. Before you retire, you might want to ensure that any borrowing has been cleared so that you’re not worrying about meeting credit repayments while getting used to your new financial situation.


• Review your mortgage. Similarly, some people choose to repay their mortgage in full before they retire to free up a portion of their monthly outgoings.


• Check your pension eligibility. You’ll be able to find out exactly when you can withdraw your private and workplace pensions directly with your providers.


• Consider advice. Retiring at any age will bring substantial changes to life as you know it, not the least in terms of your finances. A trained retirement advisor will be able to offer tailored advice and answer any questions or concerns that you might have. You can find a retirement adviser through the MoneyHelper website. If you source an adviser on your own, you should ensure that they’re authorised and regulated by the Financial Conduct Authority (FCA). You can check if a company or individual is on the FCA register here.

The potential advantages of taking early retirement

• The first advantage is an obvious one, regardless of your age: no more work! You’ll also no longer need to spend money on work-related costs, such as commuting.


• With the pressures of working life removed, you might find that you’re able to sleep better, eat healthier, and have more time for exercise, which could improve your overall health.


• An advantage to keeping in good health, physically and mentally, could mean you have more energy to enjoy retirement, possibly by travelling or pursuing certain hobbies.


• Retiring early could provide you with precious time to spend with your loved ones. This could be especially invaluable if you have children and grandchildren.

Things to think about before retiring early

• If you retire before you meet the eligible age to claim your pension(s), you will be entirely responsible for funding your lifestyle.


• Longevity is increasing in the UK, with a current average lifespan of 81.92 years. Based on these figures, if you took early retirement at 55, you could potentially have 26 work-free years ahead of you. While this inevitably has its advantages, it’s also worth giving some serious thought when planning your finances.


• While the idea of being work-free could appeal to many, some might discover that the lack of structure and routine is a challenge. This could have an effect on your mental health.


• If you retire before your partner or friends, you may find that your socialising opportunities are limited.


• When you retire, your employer will no longer make contributions to your workplace pension; as such, the earlier you retire, the less money you’ll accrue in your pot.


• If you do find that early retirement isn’t suited to you and wish to return to work, you might struggle to get back into your previous profession and could end up having to take on job at a lower wage than your pre-retirement salary.

Alternatives to early retirement

1. Phased retirement
Not sure if you’re ready to take the full plunge into early retirement?
A phased retirement is when you gradually begin the transition towards retirement from full-time work. The exact details of your phased retirement will be decided between you and your employer, but may consist of shorter days, fewer days, or flexible working.
In continuing to work, albeit on a reduced schedule, you’ll be able to benefit from workplace pension contributions; however, this will be at a lower level compared to your previous full-time contributions.

2. Part-time work
Some retirees choose to re-enter the working world in a completely different profession.
This could be for a number of reasons, including to earn a little bit of extra money, fend off boredom, or extend their social circle.
In fact, data has revealed that 42% of part-time workers in the UK are over the age of 50.

3. Voluntary work
If you find yourself twiddling your thumbs during retirement, you might choose to dedicate your time to voluntary roles. This could include knitting blankets for hospitals, walking dogs at your local animal shelter, or sparing a couple of hours to sort through donations at a charity shop.

In conclusion: the best age to retire

The best time to retire will depend on your own personal circumstances.
Firstly, you should go through your finances with a fine-tooth comb and check the age of eligibility to claim any existing workplace and private pensions that you have in place.
If retiring early is financially viable, you should next consider the impact that it could have on your lifestyle. Some may thrive in early retirement, while others could quickly become bored and miss the routine and social aspects of working life.
If you’re toying with the idea of early retirement, you could appoint a specialist adviser who will be able to talk you through your options. Online tools, such as MoneyHelper’s pension calculator, could also help you make an informed decision.

The information contained in this article is meant as a general guide and does not constitute or should be taken as advice.
September 2024.