Working hard every day can make anyone dream of retiring one day and sitting quietly in a lawn chair, sipping tea, without having to worry about working. These dreams often lead people to consider retirement at age 55, which in turn leads to thoughts like “How strong does my pension need to be to retire at 55?”
If you like retire at 55This is a no-brainer, a simple question but the most important one to ask yourself in this situation, as your pension fund decides the kind of life you want to live after retirement.
Although even thinking about retiring early is a commitment in itself, and there’s a lot of planning to be done if you’re going to live the life you dream of after retirement, and we’re here to help you walk that path.
The good sides of retiring early
Before you decide to retire early, it’s imperative that you think through it, especially the benefits and harms of this big decision.
Starting with the pros, retiring early certainly has a silver lining. If you’re stuck with endless work and those long shifts take up all your time, early retirement opens up opportunities to start a new business.
Putting your passion and time into something you love, and it could end up benefiting you financially, is certainly a good reason to take early retirement. On top of that, retiring early also means you can prioritize your health and focus on the meaningful things in life that don’t involve working tirelessly all the time.
Your savings will have to last longer
This is obvious when you retire early, but let’s put it in perspective. Let’s say you retire at the ripe old age of 70. If you live to be 90, your retirement savings will have to cover your expenses for a total of 20 years, which is what it usually sounds like.
But if you retire at age 55 and live to the same age, things are different. In that situation, your retirement savings will have to cover a total of 35 years. If you don’t have plans to start a successful business after retirement, or don’t have a good-sized pension saved up, you’re going to have trouble getting by with this model.
On top of that, your social security benefits will be less if you decide to retire at age 55. The sooner you start taking them, the lower they will be, and that’s the way the system is designed, so many times people decide not to retire. early.
Definition of a good pension fund for early retirement
That said, if you’re already convinced to retire early, you should have a pension fund that makes early retirement make sense.
Although a good early retirement pension fund depends on the lifestyle you want to establish after retirement and various individual retirements, as a general rule, you need your pension fund to be between 50% and 70% of your annual income .
Based on the above requirements and general standard UK lifestyle statistics, you’ll need between £25,000 and £30,000 a year in your pension fund to live comfortably after you retire at age 55. Although this is subjective to your lifestyle standards, it’s an amount you’ll pay for your daily necessities and occasional luxuries, ranging from eating out to that serene European vacation.
Keeping the £25,000 annual pension fund means you retire with at least £500,000 or more, assuming you’ll withdraw annually for your living expenses, but make sure you understand that this is the minimum figure if you receive absolutely nothing. of the State Pension.
It’s also important to know that retiring early means more work hours, and a large portion of that time spent saving for retirement. However, we recommend working more hours earlier and then slowly reducing these hours closer to retirement to make it healthy and sustainable.
Bottom line
Retiring early isn’t just a normal decision you make when you look at those strands of white hair in the morning, it’s a decision that must be complemented with careful planning and critical thinking. Be sure to consider your family, your financial standards and situation, your family, your retirement risks, and the type of life you want to live after retirement.
Someone great once said that retirement is always about moving towards something, not the other way around. Be sure to review your post-retirement plans and work now for the life you will live after. Always review your retirement plan as you get older because your priorities change as you go through the different stages of life.
