It is the dream of many to retire early. Indeed, 270,000 people in their 50s and 60s left the UK workforce during the COVID-19 pandemic, according to the Institute for Fiscal Studies.
Concerns about retirement poverty
However, two thirds of people aged 50–70 who quit work or lost their job during the pandemic left the workforce earlier than expected1. This means that they might not have the funds they need for a longer- than-anticipated retirement, sparking concerns that they could face poverty later in life. Of particular concern is the financial impact of accessing your pension too early, with research2 showing that doing so before reaching State Pension age could reduce your pot by 59% on average.
Compounding the issue is the fact that those who now want to re-enter the workforce are finding it difficult to get rehired. According to research from the Centre for Ageing Better, unemployed over-50s are twice as likely to be out of work for 12 months or more, than their younger counterparts.
Many factors to consider
Early retirement may be enticing, but it certainly bears thinking about. Before acting, it is always a good idea to take financial advice and think carefully about the following factors:
• Do you know how much you’ll need to live comfortably in retirement?
• If so, do you have enough in your pension pot for the lifestyle you want?
• Do you have savings or any other source of income?
• Do you still have a mortgage or any other outstanding debt you are still liable for?
• Could working for just a few more years offer you valuable financial security?
Whatever your goals for retirement, we’re here to help you get into the best possible financial position for later life.
2Canada Life, 2022
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.