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Early Retirement Planning - What to Consider

An early retirement is something many of us dream of. After all, what could be better than having all the time in the world to do the things you want to do, with the people you want to do them with? But to be in a position to do this, early retirement planning is crucial. People have different opinions about when they want to retire and the life they would like to lead when no longer working, so it is important you ask yourself certain questions before starting your planning.  

What does early retirement mean to you? 

There is no set age when it comes to early retirement. While some may consider anything below the state pension age an early retirement, others may be hoping to hang up their work boots years, even decades, before this. If you wish to retire early, you should therefore have a clear idea of just when you would like to do so. 

This is important because it not only gives you a specific goal to strive towards, but will also enable you to plan properly and analyse your financial situation more effectively. While retiring early means fewer years of working, you need to factor in that you will not be earning your usual wage. As a result, you will likely need to save more during your working years, and make sure you start working towards your saving strategy earlier, allowing yourself enough time to save the amount you require for an early retirement. 

What do you want to do in retirement? 

There are various other elements you should also consider here. Firstly, and this is the fun part, what do you want to do with your free time? While some people want to relax and spend time with their loved ones, others hope to try new activities, travel to different places and enjoy new experiences. Whatever you choose to do, and how much it costs to do so, will impact the amount of money you require. 

Secondly - and this might not be the easiest thing to have to think about - you should bear in mind your and, if applicable, your partner's life expectancies. While none of us know how long we will live for, you will need to have an idea of when this time might be - this, obviously, cannot be very specific - but it will allow you to calculate the amount of money you are likely to need to last you for the rest of your life. 

How much income will you need? 

This will vary from person to person. Some view retirement as a time when they will no longer be earning significant money, while others hope to keep on increasing their assets through the various investments they make. However much you aim to take home through investment will be dependent on your investment strategy, which should give you a good indication of expected returns. 

Whether you are relying solely on your pension schemes or planning to supplement this through other means, you should try to account for any variations by totting up the total annual retirement income you will need. This will enable you to work out how much you will have to put away, and for how long.  

What are your savings and investment strategies? 

Once you have worked out both when you would like to retire and the amount of money you'll need to do the things you want to do, the next step, and perhaps the most important, is figuring out just how you are going to make the required savings. This can be a complex process, which is why we recommend you work out your early retirement planning with the help of the experts, who can put together a bespoke plan that gives you the best chance of achieving your objectives. 

At Equilibrium, we work closely with our clients to make sure their strategies are tailored to their personality, goals and needs. By assessing your profile and personal situation, we can ensure you are working towards a clear, efficient plan designed to ensure your retirement is everything you hope it will be.   

Read more about how we can help with your early retirement planning by clicking the button below. 


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