What is the Best Age to Retire?
What is the Best Age to Retire?
My view is that people no longer just ‘retire’, they do something different! They choose to ‘work’ but perhaps in a less stressful role, charity work, follow a passion or a hobby. As we are all living a lot longer it is not beyond the realms of possibility to be retired as long as you have worked, we have clients to prove this. I am 59 and my life expectancy, according to the ONS, is 87, and I have a 1 in 4 chance of reaching the age of 94. With the availability of drugs (prescribed of course) we are being kept alive for longer.
Deciding when to retire is one of the most crucial decisions you’ll make in your lifetime and financial journey. It’s a choice that hinges on multiple factors, from financial readiness to emotional well-being. But what is the best age to retire? How much money do you need? how much to save? and the impact of retirement on your health and emotional state.
Understanding Retirement Planning
Retirement planning is more than just setting aside a portion of your income each month. It involves creating a strategy and financial plan which ensures that you can live comfortably throughout your retirement. A well-crafted financial plan considers various elements such as your desired lifestyle, expected income sources, expenses, one off items such as special holidays and long-term care/ health expenses. A solid retirement strategy also ensures that you are prepared for any unexpected financial challenges.
Calculating Your Savings Needs
How much to save for retirement?
To determine this, you need to evaluate your future income needs and expenses. Everyone’s different so you can’t simply say that you wish to retire on 50% of your current salary for example, it is meaningless. Considering what your outgoings might be in retirement will provide you with a focus and target.
Inflation is a key factor to any financial planning. Over time costs increase which has been only too evident over recent years. As I write, according to the ONS, the current rate of inflation (CPI) is 2.2%. The long-term average is in the region of 3.5% per annum which can soon eat into retirement income and savings over time.
Once you have a clear idea of what income/savings you may need then it is possible to work back to come up with a strategy taking into account your current provision and capacity to save (existing pension schemes, investments). If you don’t have provision yet, it is never too late to start, however, I wish I had saved earlier instead of enjoying my 20’s so much!
These are my top areas for consideration to achieve a solid foundation to retirement provision:
- Plan early: If you have a good financial plan and your retirement savings are on track, you might be able to retire earlier. However, retiring too soon without adequate funds could lead to a shortfall in retirement. The key is to ensure that your savings and investments can sustain your desired lifestyle throughout your retirement years. The earlier you create a financial plan to keep you on track the more likely it is that you will achieve your desired outcome. Thinking Ahead Today is Key!
- Health Considerations: Your health plays a significant role in determining your retirement age. I have seen people retire too early, which might seem appealing, but it can result in a loss of purpose or routine, which can negatively impact your mental and physical health. On the other hand, continuing to work for longer can offer a sense of purpose and contribute to better health. I have worked with people who, after a year of retirement, decide to start a new business or go back to work in some capacity, often as a consultant to the business they have retired from! I could write a whole blog on ‘losing our skilled and valued workforce in the UK’ as many retire early and we just can’t replace them!
- Emotional and Social Factors: Retirement can bring about significant changes in your daily routine and social interactions. The loss of purpose and routine can be challenging for many retirees. Emotional coaching and planning for social activities or hobbies can help mitigate these effects and ensure a fulfilling retirement. Get coaching early well before you retire so that you are ready for what is such a massive change. Someone like Vanessa Winstanley offers great support.
Conclusion
There is no one-size-fits-all answer to the best age to retire. It’s a personal decision influenced by your financial status, health, and emotional needs. By carefully planning and considering all these factors, you can determine the best time for you to retire and enjoy your golden years without financial or emotional stress.
Get in Touch with Us
Deciding on the best age to retire and planning for your future can be complex. If you have questions or need personalised guidance on retirement planning, we’re here to help!
By understanding these factors and planning accordingly, you can make an informed decision about the best age to retire and set yourself up for a comfortable and fulfilling retirement.
If I can help, please feel free to get in touch via our contact page, email me here: louise.oliver@piercefield.co.uk or pick up the phone and call 01242 399 344.
Louise Oliver
Founding Partner
Piercefield Oliver