Deciding if you can afford to retire and when is the best time for you to stop working is a decision that can depend on a lot of factors.
Health and wealth are two of the most important. You might want to consider your age, too.
If you are in poor health, you might want to retire early to make the most of your time.
Or you might be one of the lucky ones with a gold-plated pension so you don’t have to worry about money or maybe one of the not so lucky who must carry on working because you need some extra cash or just enjoy the banter and social life.
Whatever your retirement status, here are some points to consider when you are approaching giving up work that you may have overlooked.
When can you retire?
This may seem obvious, but pensions can have different retirement ages, even though you can start drawing down from many when you reach 55 years old. And you can retire before then if you want.
Don’t forget to mind the money gap that mixed age couples will have on their retirement finances. For instance, if a husband retires aged 66, but his wife is five years younger, there’s five years between when each receives the state pension.
Other checks to make :
- Does your pension let you retire early?
- Will you work after reaching state pension age?
- What age can you start drawing the state pension?
How much is your pension?
This answer depends on you and how your savings are structured. Retirement income does not just come from pensions, but from a range of other sources as well.
Your retirement savings are likely to consist of:
- Investments – like dividends from stocks and shares
- Cash – in the bank, building society or ISAs
- Pensions – provided yourself or by an employer
- State Pension
- Rents from investment property
Check how much tax you are likely to pay and the best way to structure your retirement income with the Money Advice Service for free.
Don’t forget you can look at delaying or paying more into a pension to increase the fund.