The 5 Golden Nuggets That Can Speed up Your Retirement

Let’s admit it, at least once or twice, or some, more often than others have thought about whether or not you can retire early. Perhaps at 55 or 60. If you’re a baby boomer with a final salary pension then you know this is a common reality for you (lucky you!). But for everyone else, it does mean significantly less money as a compromise to retire early. The concept of pension (unless you’re on a final salary scheme) is that the longer you work, the more you’re able to add to your pension pot. If final salary pension isn't the case for you, here are our top tips :

Spend less

We understand this is not what you hope to hear but it is inevitable. Minising on your outgoing is vital to a longer retirement. Map out your finances, and decide whether this is worth the expense, which comes down to the cost of you having to work longer.

Bridge the gap to the state pension

At your state retirement age, you’ll receive a guaranteed retirement income which usually covers a lot of the essential expenses. If you are considering retiring before that age, you’ll need to consider your plans to cover the essentials. Perhaps it would be a good idea to start looking at getting yourself a fixed-term annuity, drawdown from your pension, or use your savings. It’s also important to consider the tax implications of each option as well as the effects on your investment in the long run.

Investing for the long term

If you are 60, you’ve got more of a chance of living into your 80 than not, and a reasonable chance of hitting 90. So to be on the safe side, your savings need to last at least 30 years! Leaving it in cash won’t help as inflation will change the value and if you pick the wrong investments, it can ruin your retirement. The tip here is to pick sensible portfolios designed to produce income and protect your capital. 

Semi-retirement

This option is becoming very popular. Perhaps you can start by doing your job less in a week, 2-3 days per week. Even if this was part-time, it will make a huge difference to your pension pot. Consider looking at ‘phased drawdown’, which allows you to draw the tax-free part of your pension first, which helps top up your income while you’re still earning. 

Have a different attitude to inheritance

Equity release is an important consideration if you want to retire early. The majority of each individual’s wealth is contained within their home. If you’re willing to unlock this option, you can definitely have the retirement of your dreams. However, this does require you to change your expectations for your legacy. If you think about it, your kids are more likely to need money now than in 20 to 30 years. Equity release can make this happen!