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What to think about before you retire / can i retire early

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What do I need to think about to retire at 55?

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Life expectancy

Life expectancy in the UK has drastically increased since the turn of the century. In fact, research by the Office for National Statistics revealed that between 2000 and 2019, life expectancy for women increased from 80.4 to 83.1, and 75.6 to 79.4 for men.

This means if you retire at 55, you’ll need to budget for close to thirty years.

Thirty years is a long period of time to budget for, but it goes in a blink of an eye. (Would you believe Robin Hood: Prince of Thieves is 30 years old this year?) What sort of lifestyle would you expect to finance over that time? Will you have enough if you exceed the average life expectancy?

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The cost of care

Another important thing to consider is the cost of care – whether that’s support to continue living independently in your home in later years or residential care. The Government assumes that people will pay for their own care, so this can be very costly.

Having a comfortable retirement

Research by YouGov (28/12/2020) showed 42% of people in the UK believe they won’t be able to afford a comfortable standard of living in retirement.

You don’t want to be just ‘getting by in retirement; you want to enjoy your later life. So, as well as basics like food and housing, you need to think about lifestyle costs such as holidays, hobbies and treating yourself.

Whether you’re ready to retire

YouGov (7 Jan 2020) research found 17% of Briton’s would like to withdraw money from their pension pots before they’re 65 to be able to retire early or have extra income. Which begs the question: Are you ready for the biggest lifestyle shift you’ll probably ever face? Are you ready to stop going into work every day? Are you ready to retire at 55?

Tax Implications

When withdrawing from your pension everyone will owe a certain amount in tax to HRMC. For more information on how lump sum withdrawals are taxed, you can visit is my pension lump sum taxable. 

Will future rises in State Pension age affect how early I can retire and access my pension pot?

Whilst 55 is currently the earliest you can access your pension pot. This will be rising to 57 by 2028 to match the rise in State Pension age.

Although this is disappointing news for some, looking on the bright side, it does give you two extra years to plan and save for your perfect retirement.

The sooner you speak to an independent regulated financial adviser, the sooner you’ll know what steps you need to take to secure your ideal retirement lifestyle. For example, putting money away for an extra few years or consolidating your pensions.

So, even if your retirement age has been put back, don’t put off seeking professional retirement planning advice. Having that extra time might be a blessing in disguise, especially if you’ve only just started to consider early retirement.

Do I have enough money to retire?

It can be confusing trying to work out if youve enough to retire. There are so many variables such as life expectancy, lifestyle expectations and planning for the unexpected like ill health or residential care.

There’s often also the confusion of having multiple pension schemes, which can make it hard to work out how big your pension pot actually is. It’s no wonder people often put off their retirement planning.

At Joslin Rhodes Pension & Retirement Planningwe can help you untangle your retirement finances and plan for the retirement lifestyle you dream of.

When considering the question ‘Have I got enough to retire?’, our advisers will always ask ‘enough for what?’ and then lay out what your options are to deliver the lifestyle you want.

We take you through our three steps:

Life Coaching: helps you and your financial adviser work out what it is you want to do and what makes you tick.

Financial Planning: lets us work through what you have, what you need, and how retirement would look for you.

Financial Advice: is the final stage, where we go through the nuts and bolts of investments, pensions and how best to use them to make your plan a reality.

Once this is complete, you’ll know the answer to the question ‘Do I have enough money to retire?’

Is 55 too early to retire?

Absolutely not.

It’s a common misconception that pensioners are grey-haired OAPs in their seventies and eighties.

But in the UK, you can generally access your pension from 55 – there’s no need to wait until state pension age. This means there’s a growing group of people enjoying early retirement from their mid-fifties.

But is 55 too early to retire? In the UK, we’re hard wired into believing you retire in your sixties.

A lot of people don’t realise you CAN retire at 55.

Some think they won’t have enough for a comfortable retirement if they retire early.

Others think it is self-indulgent to stop working at 55.

But seriously, if you can afford it retire early, why wait?

It’s true that some people experience ‘retirement fear’ as they wonder what they’ll do with themselves after work. There’s no doubt that retiring is a huge step and it’s important to prepare for the emotions you might feel.

But – whilst it’s a cliché – life is short and you don’t know what is around the corner. Sadly, ill health can cut lives short or prevent us from fulfilling our dreams. Most of us work to live, not live to work. So, if you can afford to retire early, why wouldn’t you?

The first step to retiring at 55 is to speak to a retirement planning adviser as soon as you can.

They’ll help you work out how you want to spend retirement, how much money you’ll need to fund your retirement lifestyle and whether – fingers crossed – you’ve got enough in your pension pot already…

To protect you and your pension pot, make sure you choose an adviser that’s regulated by the Financial Conduct Authority.

Where will my money come from in retirement?

At Joslin Rhodes Pension & Retirement Planning, we look at your money in two different ways, your stream and your reservoir.

Your stream

Your stream is made up from regular income-producing assets, which bring a steady flow of income thats both quantifiable and dependable.

This can be your salary, your state pension or any monthly payments from the likes of property, annuities or final salary pensions. Your stream flows every day without fail, but it might not bring enough to do everything you want.

Your reservoir

Then there’s your reservoir. This is what supplements your stream. It comes from the likes of defined contribution pensions, tax-free lump sums, inheritance, investments or cash savings.

Now you have these two sources that are providing you with a bucket full of cash. Some comes from your stream, and some comes from your reservoir.

If, one month, you find your bucket has gotten deeper – maybe an unexpected expense or opportunity – and your stream isn’t filling it up enough, you can top it up from your reservoir.

Your financial adviser will look at your two sources – stream and reservoir – to give you confidence in your retirement planning and spending.

What’s the best way to access my pensions?

Before you can put your feet up in the garden or start planning holidays, you need to figure out which type of pension/s you have and what options are available to access them.

This can be confusing at first, but essentially there are two kinds of pension schemes in the UK: Defined Benefit and Defined Contribution.

Which one you have can affect what you can do with it, so its worth bearing that in mind.

Defined Benefit

A Defined Benefit (DB) pension is also known as a final salary or a career average pension. This type of pension provides a guaranteed income for life.

How much you get depends on your length of service in the scheme and salary levels whilst a member (they can be final salary, so your final salary is used to calculate benefits, or they can be based on the average salary earned during membership of the scheme).

There are many members in a Defined Benefit pension scheme, and each member pays a percentage. Your employer then subsidises — sometimes paying as much as three times the amount you put in or more.

Advantages of Defined Benefit

Guaranteed – payments continue throughout your life and are protected by the Pension Protection Fund (PPF). Most DB pensions increase every year by some form of inflation protection.

Simple – you know how much you’re going to get every month, like a wage.

Subsidised – you’ll likely get a lot more back than you paid in.

Disadvantages of Defined Benefit

Inflexible – once you’ve set what you’re getting you can’t change this and take more or less at a later date.

Hard-wired – if it comes with spousal benefits you can’t turn these off, even if you don’t have a spouse/partner

Dies with you (or your spouse if a spousal benefit is included) – when you die the payments stop, so generally, no money can be passed to beneficiaries such as your children.

Will I run out of money in retirement?

This all depends on your pension pot and the lifestyle you want to lead in retirement.

If your wondering ‘Do I need a financial advisor for my pension‘ you can check out this link,

Working with a financial adviser to address any unknowns and create a retirement plan will give you peace of mind.

Your adviser will assess your situation and help you understand how long your money will last, removing any fear of running out of money in retirement.

The concept of time is something you need to consider. The last thing you want to happen is to run out of money and then need to pay for a care home or make significant additions to your home if you have mobility issues or any other specific needs.

Time is as much a resource as money, yet we rarely give it the same focus.

That’s why at Joslin Rhodes Pension & Retirement Planning we put time front and centre, as a reminder to use it as wisely as your money.

Our PlanHappy Lifestyle Financial Planning process maps out exactly how much you’ll have and how long it’ll last for. In these forecasting sessions, our advisers are as realistic as possible to make sure you’re resting easy in retirement.

If we forecast you’ll run out of money early, then we’ll advise you on what to do regarding this and whether retiring at 55 is the right decision.

Can I consolidate my pensions?

Pension consolidation is simply a way you can keep track of your money by putting it in one pot and clearly managing it for the best growth possible.

There are advantages and disadvantages to consolidating your pension, and one of our financial advisers will be able to guide you on if it’s right for you.

The benefits of doing it

It’s easier to keep track and manage your pension savings and see if they’re doing well and then take steps to help them perform better if not.

If some of your pensions are higher cost schemes it might be better to transfer them to a lower cost scheme.

Merging your pension pots might open a wider choice of investments if you’re looking for one flexible solution.

Some drawbacks are

If your pension is a Defined Benefit pension, it might not be the best idea to transfer out as the guaranteed income takes away any investment risk.

If your pension has a guaranteed annuity rate it’s important to think about the implications carefully before transferring out and weigh up the advantages and disadvantages carefully.

It’s also important to see whether any of your pension providers will charge you for transferring money out of the scheme.

How can we help you retire at 55?  Free retirement review

To get started on your journey to retirement, you can take our free no-obligation first meeting.

You’ll be able to speak with our financial advisers who can explain our PlanHappy Lifestyle Financial Planning process, how it can help you, but most importantly, you can work through what it really is you want to do in retirement.

You tell us what you want to do, you tell us your goals and aspirations, and then we start your journey to retirement.

   Retirement Savings – how much you need to save for retirement
   Retirement Date – when you can afford to stop working
   Retirement Income – how much you can spend in retirement

So, if you’re looking to make sense of pension and retirement planning options with straightforward financial planning advice, we’re here to help.

Contact our friendly team on, 033 0133 3035 or use the form below to arrange a call back from one of our experts.

Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People

Final Thoughts

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