Reasons That Early Retirement Planning Is Important


It’s important to understand the value of early retirement planning, and how financial advice can impact your retirement situation. Here we guide you through what you need to know about early retirement planning and how it can affect your financial goals – especially if you want to quit work sooner rather than later.

Should I Be Worried About My Retirement Funding?

According to research reported in the Financial Times, half of UK adults are worried that they haven’t saved enough money to sustain their current lifestyle in retirement.

Some people across the UK have reduced their contributions since the start of the COVID pandemic and now, 34% of full-time workers say the state of their retirement finances is a cause of “significant stress.”

Most worries fall into four categories:

  • Living longer than your savings can cover
  • Your investments not performing
  • The prospect of having to pay for long-term care
  • Your spouse dying

Whilst it’s sensible to think about your future retirement plans, speaking to a financial advisor can help ease your worries and get you started on a retirement plan. There’s no sense in worrying alone with no clear plan. The sooner you get started on your retirement plan the better. And this is especially important if you want to retire early.

Common Reasons To Retire Early

While you might have really enjoyed your working life over the years, who wouldn’t want to retire early? Here are 4 of the most common reasons people look to take early retirement:

  • You’re experiencing declining health

If you’re experiencing declining health it makes sense to want to stop working sooner rather than later. You might be physically unable to carry on with the job you’re doing or you may be experiencing increased stress due to your job. In any case, health is one of the main reasons people seek early retirement.

  • You want to spend more time with loved ones

Wanting to spend more time with loved ones is another common reason people want to retire early. And we totally get that! Family and friends are the most important thing in the world so it makes sense to want to spend as much time with them as possible. Especially while you’re relatively young and healthy.

  • You have hobbies and interests outside of work

Similarly, wanting to dedicate more of your life to the things you truly enjoy doing is another common reason for wanting to retire early. Maybe you love golfing and never get time on the green? Maybe you need time to focus on arts and crafts? Or maybe you’re on the hunt for a new hobby and haven’t currently got the time to learn something new whilst working full-time.

  • You just don’t enjoy your job

Look, not everyone enjoys their work – and that’s fine! You might have been working in the same industry all your life and you’ve finally had enough. You might have enjoyed your career path at the beginning but the nature of the job has changed. Or maybe you never liked your job and you just needed the income. They are all reason enough to seek early retirement.


What Is FIRE Retirement?

FIRE stands for “Financial Independence, Retire Early.” The goal is to save and invest aggressively so you can retire sometime in your 30s or 40s. The FIRE retirement movement started in the USA but has been growing in popularity in the UK. Its main ideas originate from the 1992 book Your Money or Your Life, by Vicki Robin and Joe Dominguez.

Taking early retirement is the goal for some FIRE savers, but for others it’s about having the choice to decide when they work.


How Does FIRE Work?

Those who use the FIRE retirement method follow four rules:

  • Be as frugal as possible
  • Save as much of your income as possible (at least 50% but often up to 70%)
  • Pay off all debts including mortgage
  • Generate extra income through passive investments

This could allow you to build up a net worth of 25 times your estimated annual expenses and spending to achieve financial independence.


Early Retirement Planning Tips

If you want to retire sooner rather than later you need to have an early retirement plan in place. Here are our tips for getting started.

  1. Create a realistic budget

The first thing you need to do is get realistic about your budget. The money you put away needs to last beyond the typical 20 to 30 years that it would if you were retiring in your mid-60s.

  1. Save and invest wisely

If you plan to retire early, it’s a good idea to have a mix of ISAs, investments and a good pension. This is because if you want to retire early you will need to find another way to fund your lifestyle beyond a pension – which you can normally only access once you’ve turned 55. This is where ISAs come in. We can advise you on whether cash ISAs or stocks and shares ISAs are the best option.

  1. Be flexible about your retirement age

You may have a retirement age in mind and it’s fantastic to set yourself a goal. But you may need to be flexible about this. This is especially true if you’re growing investments to retire early.

  1. Get professional help from a retirement and pension advisor

Retirement planning can be complicated and incredibly time consuming. Getting help early from a fully qualified advisor could be the key to retiring comfortably and in your chosen timeframe.


Hilltop Financial Planning: Retirement Advisors

If you’re worried about retirement or want to reap the benefits of early retirement planning we can help. We can put together an early retirement plan for you or simply advise you on the things you can do now that will help you once you reach retirement age. Simply give us a call on 0161 509 3466 or arrange a callback and we’ll give you a ring when it’s convenient for you.

Important information: Our website offers information about investing and saving, but not personal advice. If you’re not sure which services are right for you, please request advice from Hilltop’s independent financial advisers. Remember that investments can go up and down in value, so you could get back less than you put in.

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