Do You Want To Retire Early?

For our grandparents (or even parents) generations early retirement was an attainable thing. You worked hard, you saved and you could retire early. Property prices and living costs were lower so you weren’t always paying off your mortgage until retirement. But for us millennials and Gen Z the idea of early retirement is a distant dream. But the thought of being able to retire early is something many of us would love.

I’m going to be honest I don’t know how I’m going to afford to live when I do retire, never mind if I retired early. But part of that is because we love to spend money and live in the now. But here are some tips and thoughts that may help you retire sooner rather than later.

Figure out what retirement means for you

Retirement means different things to different people, so you need to think about what it means to you before you can decide if you can retire early. For some people it means they don’t have to be in their current job or industry. Instead they can pursue a passion for their job. To do this you may only need to pay off your mortgage so by earning less you can still afford to live.

But to others retirement means no working at all, or at least not paid work. So to be able to do this you’d need to be able to pay for everything you need from living costs and bills to food and recreation. If you’re looking to never work again then you’ll need to save for a lot longer. Once you know what retirement looks like to you you can start to work out how much you’ll need.

Work out how much money you’ll need to retire early

Once you know what retirement means to you and whether you’ll have any employment income or not you can estimate how much you’ll need. Work out how much you spend on things now and which things you’ll still need if you were to retire. This way you’ll have a figure that for each year of retirement you’ll need X amount.

Consider how much you may get once you go past official retirement age including any private or state pensions as you may need far less money per year once you hit that age.

Check you’ll have worked enough to get state pension

To get a full state pension you should have paid in at least 35 years’ National Insurance contributions. This can be through self-employment or taxes. So make sure you’ve worked enough to have hit this number so you don’t miss out. For example if you started work at 20 and want to retire at 50, consider waiting until 55 to have the extra 5 years of National Insurance payments to be eligible for the full state pension.

Or perhaps you could change to part-time, or even work a bit self-employed through the extra years. Just to pay enough in. You can check how many years of contributions you’ve made through the Government Gateway, which you need to register for.

Think about downsizing in order to retire early

We spend most of our lives looking to get bigger and better properties, or ones in more desirable locations. When you get closer to wanting to retire you may want to consider downsizing your property. If you still have a mortgage you may make enough to pay it off and leave you mortgage free. What a dream thought! If you’re already mortgage free, then the cash boost could be what you need to allow you to retire early.

By getting a smaller property it should cost less in the first place, but also be cheaper to run. This is especially true if you’ve had your property for a long time and it’s significantly gone up in value since you purchased. In just under 7 years my first flat went up in value by 100K due to the desirability of the location.

Look at your investments so you can retire early

Having passive income is so important when it comes to early retirement. And spending money at the start of your journey in order to make money in the long run could be enough to allow you to follow your dreams. This might be through additional properties and their rental income. Or investments and shares you may bought that are going up thanks to compound interest.

Ideally you don’t want to just have a single pot of money with no plans or investments in line to top you up as and when you need it. Having ongoing income or investments can help along the way.

Do you want to retire early?

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