It is the dream of many to have an early retirement. Indeed, 270,000 people in their 50s and 60s left the UK workforce during the COVID-19 pandemic, according to the Institute for Fiscal Studies.
Concerns about retirement poverty caused by early retirement
However, two thirds of people aged 50–70 who quit work or lost their job during the pandemic left the workforce earlier than expected¹. This means that they might not have the funds they need for a longer- than-anticipated retirement, sparking concerns that they could face poverty later in life due to their early retirement.
Of particular concern is the financial impact of accessing your pension too early, with research² showing that doing so before reaching state pension age could reduce your pot by 59% on average.
Compounding the issue is the fact that those who now want to re-enter the workforce are finding it difficult to get rehired. According to research from the Centre for Ageing Better, unemployed over-50s are twice as likely to be out of work for 12 months or more, than their younger counterparts.
Many factors to consider about early retirement
Early retirement may be enticing, but it certainly bears thinking about. Before acting, it is always a good idea to take financial advice and think carefully about the following factors:
• Do you know how much you’ll need to live comfortably in retirement?
• If so, do you have enough in your pension pot for the lifestyle you want?
• Do you have savings or any other source of income?
• Do you still have a mortgage or any other outstanding debt you are still liable for?
• Could working for just a few more years offer you valuable financial security?
Whatever your goals for retirement, we’re here to help you get into the best possible financial position for later life.
¹ONS, 2022, ²Canada Life, 2022
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Clifford Osborne’s Independent Financial Advisors (IFA) offer free pension expert advice on Early Retirement and Retirement Planning throughout East Sussex, including in Eastbourne, Lewes, Seaford, Bexhill, Hastings, Newhaven, Crowborough, Uckfield, Brighton, Hove and Tunbridge Wells.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.
It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
The information contained within the blog is for information purposes only and does not constitute financial advice.
The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.
