Want to retire early? Financial planning could make it a reality

23/12/2024

Retiring early is an aspiration for many workers looking forward to greater freedom. If early retirement is something you’re dreaming about, a survey suggests financial planning could help you turn it into a reality and enjoy the next chapter of your life more. 

A Standard Life study found, on average, people receiving financial advice plan to retire at 66 – three years earlier than those that aren’t seeking professional guidance. 

As you’ll often be responsible for creating a sustainable income in retirement, it’s essential you understand how long your savings will last – you don’t want to risk running out of money in your later years. If you want to retire early, considering life expectancy is even more important.

According to the Office for National Statistics, a man aged 66 has an average life expectancy of 85 and has a 1 in 4 chance of celebrating his 92nd birthday. For a 66-year-old woman, the average life expectancy is 87, with a 1 in 4 chance of reaching 94. 

So, if you’re planning an early retirement, you need to consider how your pension could provide an income over several decades. 

The Standard Life survey also suggests that those working with a financial planner are more confident about their finances in retirement. Advised workers believe their pension and other assets can fund their lifestyle for 23 years. Among those not taking advice, this falls to 17 years.

Creating a tailored financial plan could mean you retire early with greater certainty about the lifestyle your pension will deliver. 

A financial plan could boost your wellbeing in retirement too

While a financial plan can help get your pension and other assets in order, the survey also revealed it could improve your overall wellbeing.

A huge 96% of people who said they did a “great deal” of financial planning before retiring say they are enjoying the next chapter of their life. In comparison, 72% of people who didn’t do any financial planning said the same. 

Engaging with your finances and thinking about what you want your lifestyle to look like in retirement before the milestone could help you get more out of life. 

Non-advised retirees are also more likely to have regrets. 23% of people that didn’t work with a financial planner say they need more money. The same proportion says they wished they’d planned more thoroughly. 

3 amazing reasons why financial planning could help you retire early

1. It can help you create a long-term plan

Often, you’ll be saving for retirement over decades. The long time frame can make it difficult to understand if you’re doing enough to retire when you want.

As well as calculating if you’re contributing enough to your pension, you may need to consider how investment returns will affect its value, or how you could use other assets to create an income. A financial plan can pull together all these different aspects, so they support your aspiration of early retirement. 

With the steps you need to take to be financially secure in retirement clearly set out, you’re more likely to remain on track. 

2. It can highlight ways to get the most out of your money

The funds you need to build to create a sustainable income for retirement can be daunting, especially if you hope to retire sooner than average. 

One of the ways a financial plan can add value is by highlighting how to get the most out of your money. For example, if you’re a higher- or additional-rate taxpayer are you claiming all the available tax relief from your pension contributions? Or is your investment portfolio aligned with your goals and risk profile?

3. It can give you the confidence to take the next step

Retiring early successfully isn’t just about ensuring you have your finances in order – you need to prepare mentally too.

It can be more difficult than you expect to give up work. Perhaps you’re worried about whether you’ll have enough income? Or you might delay plans because you’re nervous about what the next chapter of your life will look like?

A retirement plan that’s been tailored to you can give you the confidence to take the plunge and retire when you’re ready. As you’ll already have considered areas like how you’ll spend your time and how long your savings need to last, you can retire with confidence.  

Contact us to talk about your retirement plans

Whether you want to understand if you have enough to retire early or how long your pension will last, please contact us. We’re here to help you get to grips with your retirement savings and have the confidence to look forward to the milestone. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.