Retirement Planning

Can I retire at 55?

wondering if they can retire at 55

In the UK, you don’t need to wait until the state pension age to retire. You can generally access your pension pot from the age of 55. This means retiring at 55 is a very real possibility for Britons in their mid-fifties.

If you want to retire early, it’s important you have enough in your pension pot for a comfortable lifestyle. To find out if you can retire at 55, receive retirement planning advice as soon as you can. You might be able to retire much sooner than you think.

How much do I need to retire at 55?

This is the million-pound question for anyone considering early retirement. Is my pension pot enough for me to retire early? How much retirement income do I need per year? Can I already afford a comfortable retirement?

Under current legislation, you can generally access your pension pot when you reach 55, but that doesn’t always mean you should.

Your pension pot needs to cover you for as long as you’ll be around — the last thing you want is for it to run out, especially if you’ve unexpected costs and care fees.

According to Which?, the average retired couple in the UK spends £25,000 per year to have a comfortable retirement. For individuals, the figure is £19,000.

Given that the average UK life expectancy is currently 83.1 for women and 79.4 for men – making a combined average life expectancy of 81 in the UK – here are some calculations for you, if you plan to retire at 55.

Pension pot

£300k

£500k

£700k

Individual or couple

Individual spending £19k pa

Couple spending £25k pa

Individual spending £19k pa

Couple spending £25k pa

Individual spending £19k pa

Couple spending £25k pa

Will last for approx

15 years

12 years

26 years

20 years

36 years

28 years

Seeing you to around

70 years old

67 years old

81 years old

75 years old

91 years old

83 years old

Compared to combined average UK life expectancy of 81

Below

Below

On

Below

Above

On

These are example figures and don’t include the effects of inflation, state pension or any growth in the pension pot.

Taking this research as a benchmark, you’d need £650,000 to be able to spend £25,000 a year from 55 to the combined average UK life expectancy of 81.

However, it’s worth remembering that these are national averages and include London living, which inflates both costs and spending power and may not accurately describe your situation.

Plus, what if you don’t want to have an average retirement? Maybe you want to have more holidays, or money to treat yourself and your loved ones?

Knowing what lifestyle you want to have will help you and your financial adviser work out how much money you need to retire comfortably at 55.

Whatever you budget for, our Independent Financial Advisers will want to make sure you’ve plenty left in your pension pot. So you know you’re not going to run out early and to cover you in case of having any unexpected expenditure.

Can I retire at 55 with £300k?

On average a retired individual will spend £19,000 a year, whilst the average couple in retirement spends £25,000 a year. This means if you retire at 55 with £300k, an individual will run out of funds in approximately 15 years, and a couple in 12 years.

So, on paper, it doesn’t look like enough. But your motives and goals in retirement are likely completely different from the next person.

Only you know what you want to do in retirement. £300k might be perfectly adequate for your needs.

If you’re hoping to retire early on £300k, you need to understand how your lifestyle can look, then you can figure out the costings.

To properly plan for retirement, you need to do more than just have a specific amount in mind. You need to focus on what you want that amount to do for you.

Great lifestyle financial planning is about moving money around your timeline, so it’s in the right place when you need it and helps you achieve the lifestyle you want. And remember it’s about factoring in all your assets, not just what’s in your pension pot.

Can I retire at 55 with £500k in the UK?

On average a retired individual will spend £19,000 a year, whilst the average couple in retirement spends £25,000 a year. This means, if you retire at 55, £500k will fund an individual for 26 years and a couple for 20 years.

Given that the combined average life expectancy in the UK is 81, £500k should just about cover you as an individual, however a couple would have a 6 year shortfall.

But let’s look at things at little deeper.

The figure above represents an average. Average spend, average life span. So everyone’s personal circumstances will be different.

If you’re frugal, you may stretch your money further. And if you’re fit, healthy and live longer than average, you may need more in your pot.

If you want to have a lavish retirement, with regular holidays and money for hobbies, you might need to save a little more.

It’s important to remember that, with inflation, those average spend figures may go up. Also, that if you require care in your later years, your spend will grow considerably.

Put simply, £500k could be enough for a comfortable retirement at 55 in the UK. But it depends on your desired lifestyle, how long you live, and where you spend your later life.

Great lifestyle financial planning is about moving money around your timeline, so it’s in the right place when you need it and helps you achieve the lifestyle you want. And remember it’s about factoring in all your assets, not just what’s in your pension pot.

Can I retire with £700K?

On average a retired individual will spend £19,000 a year, whilst the average couple in retirement spends £25,000 a year. This means, if you retire at 55, £700k will fund an individual for 36 years and a couple for 28 years.

So, if you’ve retired at 55, that’ll take you comfortably to the UK’s combined average life expectancy of 81.

It’s important to remember that, with inflation, those average spend figures are likely to increase over time. Also, that if you require care in your later years, your spend will grow considerably.

Great lifestyle financial planning is about moving money around your timeline, so it’s in the right place when you need it and helps you achieve the lifestyle you want. And remember it’s about factoring in all your assets, not just what’s in your pension pot.

Will I need savings to retire?

Knowing you’ve money in the bank is going to make retiring early much easier. Like anything, you’re best to start saving early. Even if you save £600 a month for ten years, without interest, you’d have £72,000 ready for you to dip into when you need it.

Having savings means you can use them to help prop up your retirement if your state pension or workplace pension doesn’t quite go as far as you need.

Can I retire at 55 and keep working?

Yes. Just because you’ve taken your private pension and decided to retire at 55 doesn’t mean you have to stop working.

Maybe you feel like you need to top up your pension by adding a few more years of part-time salary to it. Or maybe you want to access your pension pot at 55 and enjoy more free time, but you’re not ready to fully retire just yet.

Just because you choose to access your pension, doesn’t mean you HAVE to retire.

Many of our clients will do some freelance or consultancy work on the side to help top up their income each month.

Don’t take our word for it…

Meet some of our clients and see what they think of us,
the PlanHappy process and how it’s helped them do what they wanted…

What do I need to think about to retire at 55?

Life expectancy

Life expectancy in the UK has drastically increased since the turn of the century. In fact, research by the Office for National Statistics revealed that between 2000 and 2019, life expectancy for women increased from 80.4 to 83.1, and 75.6 to 79.4 for men.

This means if you retire at 55, you’ll need to budget for close to thirty years.

Thirty years is a long period of time to budget for, but it goes in a blink of an eye. (Would you believe Robin Hood: Prince of Thieves is 30 years old this year?) What sort of lifestyle would you expect to finance over that time? Will you have enough if you exceed the average life expectancy?

The cost of care

Another important thing to consider is the cost of care – whether that’s support to continue living independently in your home in later years or residential care. The Government assumes that people will pay for their own care, so this can be very costly.

Having a comfortable retirement

Research by YouGov (28/12/2020) showed 42% of people in the UK believe they won’t be able to afford a comfortable standard of living in retirement.

You don’t want to be just ‘getting by in retirement; you want to enjoy your later life. So, as well as basics like food and housing, you need to think about lifestyle costs such as holidays, hobbies and treating yourself.

Whether you’re ready to retire

YouGov (7 Jan 2020) research found 17% of Briton’s would like to withdraw money from their pension pots before they’re 65 to be able to retire early or have extra income. Which begs the question: Are you ready for the biggest lifestyle shift you’ll probably ever face? Are you ready to stop going into work every day? Are you ready to retire at 55?

What does a comfortable retirement look like for you?

Regardless of why you’re thinking of retiring – maybe you’re ready to unlock the next chapter of your life, or perhaps you’ve been made redundant or have experienced ill-health – you deserve peace of mind.

Peace of mind that your retirement income will allow for a comfortable retirement you can enjoy, without worrying about the pennies or pounds.

Your dream retirement won’t look the same as anyone else’s. You might want to spend more time with your family and friends or maybe do the hobbies that took a back seat to work. Maybe you’ve plans to travel the world and see everything you’ve always wanted. Or possibly you want to stay closer to home.

Everyone’s different, which is why Joslin Rhodes Pension & Retirement Planning use the PlanHappy Lifestyle Financial Planning process to get a better understanding of each individual case.

We’ll work with you to understand your hopes and dreams first, before working out how you can fund the life you really want in retirement.

Figuring out what’s important to you and your family will help make planning your retirement much easier. Gathering together your goals — however big or small — and talking to a financial adviser could make the difference in you being able to retire sooner rather than later. And who wouldn’t want that?

What can I do now to prepare for early retirement?

If you want to retire at 55, here are three things you can do now to plan for a comfortable retirement.

Work out what you want to do when you retire: Start by making a list of things you want to do in retirement. Then colour code them to rank from the most important to the least. This gives your financial adviser a huge headstart in getting to understand what makes you tick.

Sort out your savings: Next figure out your savings and if you’ve got a bit of time before you want to retire, get saving. Even a couple of years saving will help you in retirement.

Speak to a financial adviser: The biggest step is to speak to a specialist in pension advice and retirement planning. For further information you can visit our post on – do I need a financial advisor for my pension?

At Joslin Rhodes Pension & Retirement Planning, we take clients through the whole process of working out what they want their retirement to look like before considering their assets to work out how to get it for them. Our expert team work very hard to give clients the lifestyle they want.

Will future rises in State Pension age affect how early I can retire and access my pension pot?

Whilst 55 is currently the earliest you can access your pension pot. This will be rising to 57 by 2028 to match the rise in State Pension age.

Although this is disappointing news for some, looking on the bright side, it does give you two extra years to plan and save for your perfect retirement.

The sooner you speak to an independent regulated financial adviser, the sooner you’ll know what steps you need to take to secure your ideal retirement lifestyle. For example, putting money away for an extra few years or consolidating your pensions.

So, even if your retirement age has been put back, don’t put off seeking professional retirement planning advice. Having that extra time might be a blessing in disguise, especially if you’ve only just started to consider early retirement.

Do I have enough money to retire?

It can be confusing trying to work out if youve enough to retire. There are so many variables such as life expectancy, lifestyle expectations and planning for the unexpected like ill health or residential care.

There’s often also the confusion of having multiple pension schemes, which can make it hard to work out how big your pension pot actually is. It’s no wonder people often put off their retirement planning.

At Joslin Rhodes Pension & Retirement Planning, we can help you untangle your retirement finances and plan for the retirement lifestyle you dream of.

When considering the question ‘Have I got enough to retire?’, our advisers will always ask ‘enough for what?’ and then lay out what your options are to deliver the lifestyle you want.

We take you through our three steps:

Life Coaching: helps you and your financial adviser work out what it is you want to do and what makes you tick.

Financial Planning: lets us work through what you have, what you need, and how retirement would look for you.

Financial Advice: is the final stage, where we go through the nuts and bolts of investments, pensions and how best to use them to make your plan a reality.

Once this is complete, you’ll know the answer to the question ‘Do I have enough money to retire?’

What is a good pension pot at 55?

If you’re hoping to retire at 55, a good pension pot is somewhere between £500k-£700k for a couple and £450k-£550k for an individual.

You’ll need enough money to live comfortably for the rest of your days. Based on the average life expectancy in the UK, that’s likely to be around thirty years after retiring at 55.

With the average couple spending £25k per year for a comfortable retirement, your ideal pension pot is going to depend on the lifestyle you want to have in retirement.

However, it’s important to remember your income in retirement will likely come from a number or sources, not just your pension pot, this could be things like additional savings, investments, income from rental properties and your State Pension. When all these are looked at together you may see you’ve more than enough to afford the lifestyle you want.

To plan for a comfortable retirement, you need a realistic budget for all your living expenses. And those expenses will differ from person to person.

For example:

Your home: you might have paid off your home or still make monthly payments

Your family: you might have dependents who rely on your support

Your lifestyle: you may have a frugal or more lavish lifestyle

Your retirement plans: you might want to continue with your current lifestyle or make a major change (round the world trip, anyone?)

Your health: do you know of any health conditions that could affect your later life care and costs

This is why it’s important to speak to an Independent financial adviser – authorised and regulated by the Financial Conduct Authority – as soon as you can. They’ll help you work out how much you need to make your retirement dreams a reality.

Is 55 too early to retire?

Absolutely not.

It’s a common misconception that pensioners are grey-haired OAPs in their seventies and eighties.

But in the UK, you can generally access your pension from 55 – there’s no need to wait until state pension age. This means there’s a growing group of people enjoying early retirement from their mid-fifties.

But is 55 too early to retire? In the UK, we’re hard wired into believing you retire in your sixties.

A lot of people don’t realise you CAN retire at 55.

Some think they won’t have enough for a comfortable retirement if they retire early.

Others think it is self-indulgent to stop working at 55.

But seriously, if you can afford it retire early, why wait?

It’s true that some people experience ‘retirement fear’ as they wonder what they’ll do with themselves after work. There’s no doubt that retiring is a huge step and it’s important to prepare for the emotions you might feel.

But – whilst it’s a cliché life is short and you don’t know what is around the corner. Sadly, ill health can cut lives short or prevent us from fulfilling our dreams. Most of us work to live, not live to work. So, if you can afford to retire early, why wouldn’t you?

The first step to retiring at 55 is to speak to a retirement planning adviser as soon as you can.

They’ll help you work out how you want to spend retirement, how much money you’ll need to fund your retirement lifestyle and whether – fingers crossed – you’ve got enough in your pension pot already…

To protect you and your pension pot, make sure you choose an adviser that’s regulated by the Financial Conduct Authority.

Where will my money come from in retirement?

At Joslin Rhodes Pension & Retirement Planning, we look at your money in two different ways, your stream and your reservoir.

Your stream

Your stream is made up from regular income-producing assets, which bring a steady flow of income thats both quantifiable and dependable.

This can be your salary, your state pension or any monthly payments from the likes of property, annuities or final salary pensions. Your stream flows every day without fail, but it might not bring enough to do everything you want.

Your reservoir

Then there’s your reservoir. This is what supplements your stream. It comes from the likes of defined contribution pensions, tax-free lump sums, inheritance, investments or cash savings.

Now you have these two sources that are providing you with a bucket full of cash. Some comes from your stream, and some comes from your reservoir.

If, one month, you find your bucket has gotten deeper – maybe an unexpected expense or opportunity – and your stream isn’t filling it up enough, you can top it up from your reservoir.

Your financial adviser will look at your two sources – stream and reservoir – to give you confidence in your retirement planning and spending.

What’s the best way to access my pensions?

Before you can put your feet up in the garden or start planning holidays, you need to figure out which type of pension/s you have and what options are available to access them.

This can be confusing at first, but essentially there are two kinds of pension schemes in the UK: Defined Benefit and Defined Contribution.

Which one you have can affect what you can do with it, so its worth bearing that in mind.

Defined Benefit

A Defined Benefit (DB) pension is also known as a final salary or a career average pension. This type of pension provides a guaranteed income for life.

How much you get depends on your length of service in the scheme and salary levels whilst a member (they can be final salary, so your final salary is used to calculate benefits, or they can be based on the average salary earned during membership of the scheme).

There are many members in a Defined Benefit pension scheme, and each member pays a percentage. Your employer then subsidises — sometimes paying as much as three times the amount you put in or more.

Advantages of Defined Benefit

Guaranteed – payments continue throughout your life and are protected by the Pension Protection Fund (PPF). Most DB pensions increase every year by some form of inflation protection.

Simple – you know how much you’re going to get every month, like a wage.

Subsidised – you’ll likely get a lot more back than you paid in.

Disadvantages of Defined Benefit

Inflexible – once you’ve set what you’re getting you can’t change this and take more or less at a later date.

Hard-wired – if it comes with spousal benefits you can’t turn these off, even if you don’t have a spouse/partner

Dies with you (or your spouse if a spousal benefit is included) – when you die the payments stop, so generally, no money can be passed to beneficiaries such as your children.

Defined Contribution

A Defined Contribution (DC) is the more common type of pension. You might know these as SIPPs, personal pensions, workplace pensions, stakeholder pensions or ‘money purchase’ schemes.

These are fundamentally different from DB pensions, in that you’re the only member.

These pensions rely on what you pay into them, and if its a workplace one, your employer too.

This money is then invested in the markets to hopefully grow over the long term. Once you hit 55, you can generally take a 25% tax-free lump from your pension, either all at once or in small amounts.

With the remaining 75%, you have the options of choosing an annuity and/or drawdown.

Annuity pensions

These are similar to a DB pension, giving you a guaranteed income. However, unlike a DB pension, these are customisable at the outset, allowing you to add a spouse’s pension or increase monthly amounts in line with inflation.

In some cases, if you have a life-shortening health issue, the insurance company can agree to pay a higher amount.

Advantages of Annuity pensions

Guaranteed – payments continue throughout your life (or agreed term) and are protected by the Financial Services Compensation Scheme (FSCS).

Simple – no need to worry about investments or market volatility.

Customisable – you can tailor it to what you want at the outset.

Disadvantages of Annuity pensions

Inflexible – once you’ve set what you’re getting you can’t change this and take more or less at a later date.

Dies with you (or your spouse if a spousal benefit is included) – generally speaking, when you die the payments stop, so no money can be passed to beneficiaries such as your children.

Drawdown

Another option, called drawdown, allows you to access your money how and when you want it. You get much more control over your money with this, but with added risk.

Like everything in life, too much freedom isn’t always a good thing. If you use that flexibility to overspend, your pot could run out quicker than you anticipate.

Plus, there are investment risks and also tax implications should you take large amounts from a drawdown pension.

This option does, however, have a death lump sum, allowing you to pass on the remaining pot to whomever you wish.

Advantages of Drawdown

Flexibility – you’re in full control of when and how much money you take.

Death lump sum – if there’s money left when you die you can pass it on to whoever you want.

Disadvantages of Drawdown

Investment risk – your money remains invested in the markets, which can go down as well as up. However, this risk can be managed by choosing investments suited to the level of risk vs reward you’re comfortable with.

Withdrawal risk – this is twofold. Firstly, you take too much, too soon and your money runs out. Secondly, fear of running out stops you drawing your money, and you end up 20 years down the line with a large pot of money that you no longer have the time or inclination to do the things you want with.

Will I run out of money in retirement?

This all depends on your pension pot and the lifestyle you want to lead in retirement.

If your wondering ‘Do I need a financial advisor for my pension‘ you can check out this link,

Working with a financial adviser to address any unknowns and create a retirement plan will give you peace of mind.

Your adviser will assess your situation and help you understand how long your money will last, removing any fear of running out of money in retirement.

The concept of time is something you need to consider. The last thing you want to happen is to run out of money and then need to pay for a care home or make significant additions to your home if you have mobility issues or any other specific needs.

Time is as much a resource as money, yet we rarely give it the same focus.

That’s why at Joslin Rhodes Pension & Retirement Planning we put time front and centre, as a reminder to use it as wisely as your money.

Our PlanHappy Lifestyle Financial Planning process maps out exactly how much you’ll have and how long it’ll last for. In these forecasting sessions, our advisers are as realistic as possible to make sure you’re resting easy in retirement.

If we forecast you’ll run out of money early, then we’ll advise you on what to do regarding this and whether retiring at 55 is the right decision.

Can I consolidate my pensions?

Pension consolidation is simply a way you can keep track of your money by putting it in one pot and clearly managing it for the best growth possible.

There are advantages and disadvantages to consolidating your pension, and one of our financial advisers will be able to guide you on if it’s right for you.

The benefits of doing it

It’s easier to keep track and manage your pension savings and see if they’re doing well and then take steps to help them perform better if not.

If some of your pensions are higher cost schemes it might be better to transfer them to a lower cost scheme.

Merging your pension pots might open a wider choice of investments if you’re looking for one flexible solution.

Some drawbacks are

If your pension is a Defined Benefit pension, it might not be the best idea to transfer out as the guaranteed income takes away any investment risk.

If your pension has a guaranteed annuity rate it’s important to think about the implications carefully before transferring out and weigh up the advantages and disadvantages carefully.

It’s also important to see whether any of your pension providers will charge you for transferring money out of the scheme.

How can we help you retire at 55? Free retirement review

To get started on your journey to retirement, you can take our free no-obligation first meeting.

You’ll be able to speak with our financial advisers who can explain our PlanHappy Lifestyle Financial Planning process, how it can help you, but most importantly, you can work through what it really is you want to do in retirement.

You tell us what you want to do, you tell us your goals and aspirations, and then we start your journey to retirement.

   Retirement Savings – how much you need to save for retirement
   Retirement Date – when you can afford to stop working
   Retirement Income – how much you can spend in retirement

So, if you’re looking to make sense of pension and retirement planning options with straightforward financial planning advice, we’re here to help.

Contact our friendly team on, 033 0133 3035 or use the form below to arrange a call back from one of our experts.

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