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By using our early retirement pension calculator, you will:
- start to eliminate some of the uncertainty around early retirement, and get a better idea of whether it is possible for you
- understand what you need to have invested into your pension pot in order to take a sufficient, regular income throughout your retirement
- see how your lifestyle, financial commitments and investment returns all impact your capacity to retire early
- have the opportunity to receive a further, in-depth analysis of your personal situation from our pension and retirement specialists
Can you afford to retire early?
For many, early retirement is the ultimate goal. However, getting there can be pretty confusing. Plus, you don’t want to run yourself ragged for the majority of your life just so you can step into your golden years sooner rather than later.
So, how does it work?
We’ve designed our early retirement pension calculator in seven straightforward steps. To start, enter your net income, followed by an estimate of your yearly expenses in retirement (you can use our budget calculator if you aren’t sure). Next, decide on your initial investment. Our calculator will find your monthly deposit amount automatically - easy!
You then choose your monthly return on investment - we’ve set it to 5% by default, which is a sensible place to start. You also need to decide your withdrawal rate; we assume it is 4%, but you can change it. Once the calculator has all of this information, it will tell you the required final balance of your investment and the time you need to hit this goal.
What makes our early retirement pension calculator so good?
Most pension calculators are based on your estimated retirement length; they assume that you will eventually drain all of your resources, leaving you in a sticky situation if you live longer than expected. This calculator works on the understanding that you will live solely on the interest gained from your investment
How to use our early retirement calculator
Our calculator works out the amount of money you will need to have invested to provide enough income for retirement. If you’re not sure how much you need to retire, try our retirement cost calculator for couples or our singles retirement calculator
This calculator works on the ‘4% safe withdrawal rate’ rule of thumb that assumes that if you only take 4% of your fund per year it should protect the capital in your investment. So, if you have £200,000 saved and you take out £8000 a year, you should be able to continue to do this for the length of your retirement (at least 30 years), keeping your initial £200,000 investment intact. The research behind the safe withdrawal rate is based on the famous Trinity Study.
This calculator finds that magic number of which 4% equals our monthly expenses.
The investment return is set at a default of 5% based on Warren Buffet’s claims:
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About our Early Retirement Calculator
It doesn't focus on life expectancy
Most pension calculators are based on your estimated retirement length; they assume that you will eventually drain all of your resources, leaving you in a sticky situation if you live longer than expected. This calculator works on the understanding that you will live solely on the interest gained from your investment.
Focus on financial independence
Our early retirement calculator produces figures that should enable you to use the passive income of the interest accumulating on your investment to cover all of your expenses; that means, with the right action today, total financial freedom is possible for your future.
It leaves you with money to pass on
The calculator doesn’t just look at your future. In theory, the capital amount of your all important investment should increase. Your capital investment should act as a buffer so, you should have a chunk of money to pass onto your loved ones when you pass away.
How much do you need to retire early?
The minimum amount you'll need in retirement is about £9160 a year (if you're single) or just under £19,000 if you're in a couple. As you can see below, the amount you'll need to enjoy a comfortable retirement varies massively depending on who you ask.
All of these estimates are based on the lifestyle habits and spending of people reaching state pension age and not early retirement.
It's important to remember that those enjoying early retirement are likely to have different spending habits and needs than their older counterparts, so if you're planning to retire ealy, you're going to need to build a plan based on the lifestyle you want to enjoy and not on someone elses estimate.
As a general rule of thumb, multiply your desired annual income by 25 to find out the size of pot you'll need.
How much should I save for early retirement?
How much you need to save is relative to the amount of income you want in retirement, what age you plan to retire at, how much you can afford to save (and for how long) as well as your investment choices and risk profile.
In 2018, Fidelity released research that suggested you should aim to save at least 1 x your salary by the age of 30, 3x by 40, 6 x 50 and 8x by 60 in order to 10x your investment by the time you're 67.
If you're planning to retire earlier, you're going to need to save more, and sooner. If you want to be certain of reaching your early retirement goals, we recommend speaking to a financial adviser who can help you build a tailored retirement plan.
Speak to an early retirement investment specialist.
Our early retirement pension calculator is your introduction to the world of early retirement; now it’s time to take the next step and gain advice 100% tailored to you.
Frequently Asked Questions
The minimum recommended income in retirement is £9,609 a year so if you retire at 55 you'll need at least £105,699 to last until your state pension kicks in at 66.
But that's based on the current state pension age and some of us won't receive our state pension until we're 68.
It's also assumes you'll be comfortable living on the minimum amount recommended for retirement, but if you're hoping to enjoy a comfortable retirement experts estimate you'll need between £15,000 to £40,000 a year.
So you could need anywhere between £165,000 and £520,000 to retire at 55, and that only gets you to state retirement age.
You'll still need to budget to top up your state pension once you get to state pension age.
*all of these assumptions are based on you depleting your pension pot and don't allow for you to pass wealth on.
Read our Full article here: How much do I need to retire at 55
You could just about retire at 55 with £300k in the UK, as this might reasonably give you £9-12K income a year sticking to the recommended 3-4% a year safe withdrawal rate. However that barely covers minimum income standards in the UK, much less provides for a comfortable retirement.
If you are considering retirement at 55 with 300K in your pension pot there are 4 important questions worth asking yourself.
- How much money do you need each year?
- Do you have any other income?
- What are your retirement lifestyle goals?
- How long do you need 300K to last?
Read the full article here Can I retire at 55 with £300K
You can retire at 55 with £400k in the UK, as this might reasonably give you £12-16K income a year sticking to the recommended 3-4% a year safe withdrawal rate.
However that barely covers minimum income standards in the UK for a single person and is less than the £18K a couple will need for a basic retirement according to industry estimates.
If you can live on 12K-£16K per year. Great. But if your income needs are greater you might struggle. For instance, if you plan to take 50K per year your pension pot will be gone in around 8 years. So you need to do your homework before you make a decision.
Read the full article
Industry estimates reckon you’ll need anywhere between £10,000-£30,000 per year for a single person in retirement and at least £17,000-£40,000 a year for a couple in retirement.
But these figures are estimates based on averages.
A better way of working out how much you need to retire is to look at home much you're currently spending per year and use Target Replacement Rate to work out how much you'll need in retirement to sustain your existing standard of living.
Target replacement rate states you'll need anywhere between 50-80% of your pre-retirement income to mainstain a similar standard of living in retirement
Of course, if you plan on living a completely different lifestyle in retirement then you'll need a more bespoke appoach to working out how much you'll need to retire.
Read more in our full guide to How much you need to retire
The increased choice and flexibility for accessing your pension in the UK has brought with it added responsibility and risk. Many people are now also questioning whether they need a financial adviser for their pension. A study of those with pensions in flexi-access drawdown, carried out by insurance giant Zurich, found that a large percentage were unprepared and uneducated about the risks they were taking on. Despite that many were choosing to go it alone without consulting a financial adviser.
You don’t need a financial advisor for the state pension or guaranteed pensions. But if your pension is based on investment performance it would be a wise move. Zurich estimates that almost 41% of those in drawdown without advice will run out of money in retirement
That’s not to say that you absolutely need a financial adviser but the evidence published by Royal London in 2019 suggests that you’ll be wealthier in the long-term if you have one.
Financial advisers don’t have a crystal ball when it comes to investing, but they have been trained to take into account all of the moving parts that make long-term financial planning so complex.
Need more reasons to work with a financial advisor? Read the full article here
Retirement isn't a one-size fits all affair anymore, there are lots of choices about how you can spend your golden years.
There are 5 types of retirement you could consider:
- Early retirement
- Mini retirements
- Phased retirement
- Traditional retirement
You can find out more about the different types of retirement in our full article here
In a word, No. unless in extremely rare circumstances.
Pensions are designed to help you save for old age and offer generous tax incentives to do so.
But because 'delayed gratification' isn't high on the list of natural human strengths the government make it extremely difficult (and highly unattractive) to access pensions before you reach 55.
Most 'pension liberation' services are a scam that could see your entire pension pot in the hands of criminals.
If you want to retire before 55, you'll need to make alternative plans to fund your retirement until you can legally access your pension.
Accessing your Pension for Early Retirement
Pensions are the most tax efficient way of saving in the UK, especially if you’re a higher rate taxpayer, so it’s best practice to save into a pension first before exploring other options like ISAs.
However, It is important to know that if you are investing in a pension, you will not be able to access it until you are 55.
If you plan to retire before 55 then you should speak to a financial adviser to create a plan that will still provide tax-efficient savings and also allow you to reach your financial goals.
This early retirement pension calculator is provided for general information purposes only. It is a guide and does not reflect the actual amount that you will need in retirement.
Any information contained within this website should not be deemed to constitute financial advice, and should not be relied upon as the basis for a decision to enter into a transaction, or as the basis for any financial or investment decision. It is provided for general information and it is vital (and in most cases a regulatory requirement) that you contact a Financial Adviser for tailored professional advice in regard to pension and retirement planning.
- No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.
- If you are a member of a pension scheme with safeguarded benefits, it is likely it would be in your best interests to retain the safeguarded benefits.
- Make sure you understand all the risks before investing.
- The value of investments and the income they produce can fall as well as rise and you may not get back your original investment. Past performance is not a reliable indicator of future results.
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