10 min read

Retiring early: is it still possible?

Early retirement might seem like an impossible dream, especially for people in their 20s and 30s who worry they will end up working far longer than their parents’ generation did.

Elderly couple walking along the beach with bikes

Given that it’s much tougher these days to get on the housing ladder, it’s no surprise that this goal is a much more immediate priority for many people than thoughts of a comfortable retirement, especially an early one.

What counts as ‘early’ retirement?

Early retirement is when you stop working before the statutory retirement age. What age this is will vary depending on your gender and when you were born, but typically it will be in your mid-60s.

Research conducted by Old Mutual Wealth among 50 to 75 year olds found that the average retirement age was 63, while a quarter of people surveyed were able to retire at 60. But people who had not yet reached retirement age were hopeful that they would be able to stop working earlier. About 12% thought they would retire at 56-60, while an optimistic 3% thought they would be aged between 50 and 55.

Yes, it’s aspirational, but retiring early at 50-55 could be a more attainable goal than you think. The key is to start saving early enough and make sacrifices now so you can live well tomorrow.

How one couple retired in their early 50s

Richard, who lives in the Forest of Dean in Gloucestershire, retired five years ago along with his wife when both were in their early 50s. He attributes his success to long-term planning and a willingness to watch the pennies earlier in life:

“The set of values drummed into us by both sets of parents has been key. All left school in their early teens. Their view was if you didn’t work you didn’t eat, and if you couldn’t afford it you couldn’t have it.”

Think ahead with a long-term saving strategy

“Our financial approach has always been conservative and long-term. We both benefit from final salary pension schemes, which we joined at the first opportunity and made maximum contributions to over the years. We took advantage of company save as you earn share schemes, again making maximum contributions and reinvesting dividends.

“The only loan incurring interest we have ever taken out was our mortgage, which we switched to an offset as soon as they became available. We always paid credit cards off each month. I suppose it has been a strategy of deferred pleasure, always looking for value but never cheap and not wanting to be beholden to anybody financially.”

Could more people retire early?

You may argue, quite sensibly, that anyone can retire early if they’re lucky enough to have a gold-plated final salary pension.

Many companies are phasing out these generous pension schemes, which pay out a portion of the employee’s annual salary for the rest of their life, because they simply cannot afford to fund them anymore. But Richard is convinced he could have retired early even without it:

“We would have found another vehicle for saving,” he said. “It may have meant our income on retirement would not have been so good, or we may have had to defer the date, but we would still have achieved early retirement. The fact is that we are able to continue saving now.”

Where to start with early retirement planning

If you want to get started on the road to a comfortable early retirement, begin by drawing up a budget. This should tell you how much you can afford to save depending on your salary, financial commitments and household budget. This is where you may have to cut back – are you willing to cancel your TV subscription to chuck that money at your savings pot instead?

Then you need to find the right vehicle for your pension savings. Paying as much as you can into your workplace pension is usually a good option because, if your company also contributes, you’re essentially getting free money. You can also go the DIY route and set up your own pension, and you will get tax relief on your contributions – depending on what type of taxpayer you are.

A new way to save for retirement and get the most out of your savings is through the Lifetime ISA (LISA), which offers a generous government bonus.

How a Lifetime ISA could help you retire earlier

The Lifetime ISA was launched in April this year as a way for people to save towards two key financial goals at once: buying their first home, and retirement. Savers aged between 18 and 39 can contribute up to £4,000 a year into their Lifetime ISA and receive a bonus of 25% of whatever they put in, up until they turn 50. They can then withdraw the money tax free, either to buy a property or once they reach the age of 60.

The Lifetime ISA is a good additional savings vehicle but probably shouldn’t replace a pension – especially a company scheme. Consider taking financial advice to help you plan for an early retirement, but remember there will be costs involved.


Written by Hannah Smith – Financial Journalist

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.