The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
I’m sure there are many people who have thought about retiring early, especially first thing on a Monday morning when their alarm wakes them up. But whilst early retirement might be a nice option its important to consider if you can afford to retire early.
How much money will you need for retirement?
You will firstly need to create a monthly budget to cover essential things such as food, utility bills, insurance etc. Hopefully your mortgage should be paid off when you retire. If you are planning to take holidays this should be budgeted for too. When you retire its also essential to have an emergency fund to pay for any unexpected expenses. You won’t know exactly how much you’ll be spending in retirement but estimating how much you will need each month/year will give you an idea of how much you will need in your pension pot to be able to retire comfortably.
Review your pension
When you pay into a pension throughout your working life you are investing your hard-earned cash, so you really can’t afford not to check how your investment is performing. We would recommend reviewing your pension at least twice a year to make sure your savings are on the right track to achieving your retirement goals.
Are your debts cleared?
Your pension will be a fixed income which means there won’t be much flexibility when it comes to spending. If you retire whilst you still have debts to pay you will be using money that should be funding a comfortable retirement for you. It would be much better to work for a few more years, pay off your debts and then be able to retire without money worries.
Obviously the longer you pay into a pension the more it has time to grow, so you are likely to receive a smaller pension if you stop paying in before the normal retirement age.
Before taking the jump into early retirement review your pension regularly and sooner rather than later. This way you will have time to effect it positively to ensure when you do retire you can do it comfortably.
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Home>Blog> Goodbye tension hello pension. Is early retirement the right option for you?
Goodbye tension hello pension. Is early retirement the right option for you?