Even prior to the coronavirus pandemic and its widespread socio-economic impact, the younger generation of workers were facing an uncertain future.
Rising house prices is a massive contributor to this uncertainty, as is the nation’s growing pensions crisis. The latter is already driving up retirement ages throughout the UK, meaning that younger citizens may have to work for longer before enjoying a hard-earned rest.
However, with the right planning, it’s still possible to retire early and make the most of your life. Here’s how.
What are the Pros of Early Retirement?
The first question here is what exactly constitutes early retirement? After all, even the word ‘retirement’ is often misunderstood, as while this often means finishing full-time work, you may continue to work and earn money in different and less stressful environments.
So, for the purpose of this article, we’ll assume that retirement refers to the concept of financial independence, meaning that you have the choice to stop working completely when the time comes.
When it comes to early retirement, this may also have different meanings depending on your expectations.
Historically, retirement is taken around the age of 65, so an early retirement would be one that took place before this milestone. However, when most people refer to this they mean retiring in their 50s or even younger, which represents an ambitious goal but one that’s also attainable with the right type of preparation.
The Retirement Checklist – Planning and Seeking Out Additional Funds
As we’ve already said, retirement simply refers to financial independence in its true form, and achieving this requires a number of different accomplishments.
Firstly, you’ll need to have paid off your debts, ideally including your mortgage. The latter point is wholly necessary, however, so long as you have paid off the majority of this sum and have only minimal monthly repayments.
Similarly, you’ll need to have enough income to fund your daily needs, remembering that you won’t be eligible for your state pension until the age of 68. At this point, you’ll accrue just the basic amount of £175.20 per week, so ideally you’ll have additional income to fund your lifestyle.
This is where private pension (or workplace) pension plans come into play, as can additional income that’s accrued through investments.
An excellent way to achieve this is to create a broad investment portfolio over time, ideally starting in your 20s when you’re able to fully capitalise on the benefits of compound interest. You’ll need to create a diverse range of investment interests during this period, with assets such as stocks, commodities and currency available through a low spread forex broker.
As you get older, you can focus on consolidating rather than accumulating your funds, while remembering that you may not need a huge amount of money to retire early.
However, the key is to calculate your mortgage and debt repayments while measuring these against your various income streams, in order to determine the precise amount required to retire at a set age.