How to plan for early retirement

How to plan for early retirement

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It is estimated that 80% of British adults underestimate their projected life expectancy and that nearly 15 million people have no private pension savings at all. Those figures suggest we might not be a nation of planners. But plan and strategise we must if we harbour any dreams of taking early retirement. Acumen explains how to prepare for early retirement.

Minimum private pension age increases

If you’re dreaming of retiring early, we have good news and bad news.

Let’s start with the bad news, which is that government ministers recently confirmed plans to raise the minimum private pension age from 55 to 57 in 2028. That means that anyone aged 47 and under who is currently contributing to a private pension will have to wait an extra two years to access their hard-earned pension pot of savings. This does not affect when the state pension can be claimed.

The good news is that pension savers who fall into that age bracket now have two extra years to amass a generous enough pension pot to enjoy the retirement of their dreams. We say that not to be contrary, we appreciate an extra two years of work will be a disappointment for many, but to underscore the fact that saving for retirement – particularly early retirement – requires time to accrue enough funds.

Stoking the Fire for early retirement

Followers of the “Financial Independence, Retire Early” movement, or Fire, make it their goal to save enough money to retire in their 50s, 40s or even their 30s in some cases. Underpinned by a philosophy of extreme-saving, followers of the Fire ethos aim to save between 50-75% of their post-tax earnings – whilst investing in real estate, stocks and side businesses – to build savings worth 25 times their annual spending (not income).

The general rule of thumb is to then live off a withdrawal rate of 4% of your funds per year. It’s safe to say that the Fire philosophy is an extreme route to financial independence and not one we would recommend – especially in the current financial climate. It requires a certain level of sacrifice that goes well beyond the normal realms of frugality. It does, however, demonstrate what is possible when you set your mind to it.

5 tips for achieving early retirement

If you would prefer to save towards an early retirement in a more conventional manner, and still enjoy life’s pleasures along the way, we’ve compiled five tried and tested tips to help you on your way.

1. Start early

Building wealth generally takes time. With enough time at your disposal, saving little and often not only relieves the pressure later in life but also gives you more time to multiply your money through investments.

2. Make a plan

It’s important to formulate a strategy. This should include the three stages of saving: aggressive accumulation during your career; growth of assets during semi-retirement; and accumulated assets during final retirement.

3. Use your property

Your mortgage should ideally be paid off by the time you retire. Then you can contemplate selling and hopefully making a profit to put the funds from your home towards bolstering your retirement plans.

4. Invest wisely

Investing in shares can deliver a high return rate and help you to fund your early retirement. However, you will need to research thoroughly and seek out financial advice to devise a structured plan and reap the rewards.

5. Maximise tax breaks

Up to 25% of your pension fund up to the Lifetime Allowance can be withdrawn tax-free. Combining income from a pension with tax-free income from an ISA, can help you to maximise your personal allowances.

Speak to Acumen today

As with all pension planning, but particularly if you harbour dreams of early retirement, it is imperative to seek the guidance of an independent financial adviser. Our expert team of financial advisers, pension advisers and financial planners provide a holistic approach to your wealth management. We leave no stone unturned to help you achieve your financial goals with realistic, structured and achievable financial strategies.

For more information about our retirement planning and pension advice, or to arrange a consultation, please contact Acumen today by calling 0151 520 4353 or email us at

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