Early Retirement

How to work out if you can afford early retirement

Lots of people dream of taking early retirement and making more of their free time.

Maybe you would like a more relaxed lifestyle. Perhaps your health isn’t as good as it was. Or maybe you would simply like to spend more time on a hobby or with your grandchildren.

There are so many reasons why people might want to take early retirement. However, it’s important to think about it carefully.

Weigh up the pros and cons

Not having to go to work might be a very attractive option. You may dislike your job, or want to prioritise your health.

However, whilst it can be easy to be swayed by thoughts of winter sun or unlimited rounds of golf, there can be downsides to early retirement.

The two main drawbacks to early retirement can be financial:

Firstly, you are likely to receive a smaller workplace pension than if you worked until retirement age, as you will be accruing the fund for less time.

On top of this you won’t be entitled to your State Pension until you are in your mid to late 60s (the state pension age is currently under review and may change).

Work out if retiring is affordable

So how do you work out if you can afford to take early retirement?

Figuring out the options can be overwhelming and confusing. You basically need to comprehensively forecast your outgoings and work out how to maximise your pension income.

Working with a financial advisor can help you plan the next chapter in your life. Taking the stress out of the decision to retire early.

At Amethyst we use easy to understand cashflow planning to establish the amount of money you will require after you retire.

Do detailed cash flow planning

This is bespoke to you and will include both regular costs such as your monthly outgoings, as well as bigger financial commitments such as helping your children through university or taking that trip of a lifetime.

We can present you with this in an easy to understand visual representation. We’ll also provide you with a comprehensive report.

Once you have worked out your future financial requirements, we can work with you to review your existing pensions and savings. We will figure out the best and most tax-efficient way for you to maximise your money.

We will then help you to devise a plan and help you to regularly review it over your retirement years to ensure it is on track, so don’t hesitate to get in touch.