Early retirement is changing – here's what experts say

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However, according to an IFS report on UK pension trends published last month, this has changed: “Retiring before state pension age is increasingly concentrated among the wealthier population.”

The report showed that those who have average wealth in their late 50s and early 60s are most likely to be employed and work until they reach retirement age.

In the UK, people can currently become eligible for the state pension at age 66.

The key factor in whether early retirement is possible is of course money, said Karjalainen.

“It appears that the increase in employment among people of average wealth is largely due to financial necessity, with many still having an outstanding mortgage, for example,” she said.

For Gary Smith, financial planning partner and retirement specialist at Evelyn Partners, the key question is whether people can “afford the life they want.”

There are several factors that come into play when answering yes, and many of them relate to saving, Smith said. This is particularly important in the UK as many pension-specific savings cannot be accessed until the age of 55.

In some cases, it may be a good idea to access these funds to retire early, but caution should be exercised, Karjalainen emphasized.

“It is important for these individuals to consider the impact of using a pension pot to fund immediate needs in the run-up to state pension age, as this may have an impact on their long-term financial security and income in retirement,” she said.

If you want to retire even earlier, “you need to have non-retirement savings that you can use in the years in between,” Smith said. Retiring early also means that the retirement pot needs to be larger so that it lasts longer.

Saving money as early as possible is crucial for anyone thinking about early retirement, he said, even if it means making lifestyle changes such as foregoing vacations abroad and not frequently buying expensive things like new cars . This will also ensure the savings last longer, he added.

Another factor that can affect whether early retirement is possible are unavoidable costs, such as: B. Housing costs, Smith said.

“A key burden is housing costs, as high mortgage payments will contribute to retirement savings being quickly depleted,” he explained. Those without a mortgage could consider downsizing their home to minimize costs and use the extra money to fund early retirement, he said.

In addition to saving, investing is another important way for people to position themselves for early retirement, Smith emphasized.

“A saver can take action with their company pension plan by going under the hood, looking at how it is invested and determining whether they can improve the default fund,” he explained.

Taking more risk early on can lead people to take advantage of stock market growth, Smith suggested, advising people to better protect themselves as retirement approaches.

Whether people plan to retire early or not, many are not paying enough attention to their retirement funds, Karjalainen recently told CNBC’s “Squawk Box Europe.”

“I think there is a certain complacency when it comes to retirement planning, particularly among younger people,” she said.

A key reason for this is that deciding how to plan for retirement and how much to contribute is a difficult decision, with many variable factors such as future income and length of retirement, she explained.

“Because it’s such a complex decision, people just put it off and just stick to what their employer tells them is the right contribution rate. And I think that’s really the problem,” Karjalainen said.

Employers in the UK are required to enroll employees in pension schemes where the standard contribution set by the government is 8% of eligible earnings. People also often assume that this is enough – as set by the government – when in fact Karjalainen said that ideally people should save between 12% and 15% of their total income.