Most of us will have come home from work on many occasions and really wished that we could just walk away and never go back. Unless you win the lottery the chances of an early retirement are pretty limited for the vast majority of us.
Unfortunately finance is the biggest issue and to retire earlier than usual you must be confident that you can support yourself and any partners or children for the additional years when you are not working.
Therefore, retiring young isn't as simple as just not being in work. There are many factors to consider and they'll need to be carefully thought through and discussed with other family members and probably financial advisers too before taking the decision to retire early.
If you've reached the point where you know that you want to retire young and have worked out that it's financially possible to do so, there are still other calculation to consider. Such as early voluntary redundancy payments, work pensions, statutory pensions etc.
If you retire before State Pension age you will not receive a State Pension straight away, and will stop building up your pension - resulting in a ‘lesser pot’ than if you were to have kept working. This is because you get a basic State Pension by building up enough 'qualifying years'. A qualifying year is a tax year in which you have sufficient earnings on which you have paid National Insurance Contributions (NICs). It also includes a year in which you are treated as having paid or have been credited with paying NICS.
Here are some links that may help you review your financial status:
Perhaps you place retiring early well above maintaining a specific lifestyle in terms of level of income. Therefore, you may choose to cut back on your spending and invest some of the savings you are able to make for later years. Maybe you will choose to think about downsizing your home if your children have left. Or you may have other ‘skills’ which you know you can make a living off, should you need to make additional money as you go.
You and your immediate family need to be sure that early retirement is the right option for all of you and that is financially viable. If this is the case then retiring early may present many more opportunities for you to enjoy your leisure time and could result in you leading a healthier and more active lifestyle.
This article was written by the career coaching experts at Renovo.