Early Retirement – All You Need To Know

- by Isla Williams

Sometimes, you may be left with the decision: Be made redundant or decide to go for an early retirement. In this chapter, we discuss the pros and cons of an early retirement and how to know if it’s right for you.

Lost Your Job? What Can You Do? – Chapter Four

Early Retirement -  All You Need To Know - Cashfloat

It can be a difficult time when work comes to an end. If you have been made redundant, it is doubly stressful, especially if you still have a mortgage to pay and a family to raise. However, sometimes the opportunity arises to go for early retirement, and while this may seem to be the perfect opportunity to fulfil your dreams, it can come at some financial cost.

So, is the dream of endless spare time worth the financial costs that could occur if you choose this path?

How to Retire Early

Thinking about retiring early? Retiring early begins with looking at your finances to see if you can afford to retire early. Aim to have all your debts paid off before you retire, including any bad credit online loans and your mortgage if possible. Begin living below your means and focus on reducing your big expenses. Think of a backup plan which could work for you – what if you hate the unstructured days of early retirement, can you return to work?

Before you retire early, here are some points to think about;

  • How much money do you need before retiring?
  • Do you have debts which are not paid off?
  • Have you maxed out your retirement accounts?
  • Have you gotten serious about lifestyle changes?
  • Do you have a retirement budget in place?
Considering early retirement? Make sure you have a retirement budget in place - Cashfloat

Early retirement due to ill health

First, let us look at considering early retirement due to ill health or disability. It is important to get expert advice on this matter and to consider all the available options before going down this route. All employees have various rights. If a chronic illness, such as diabetes, is making it hard for you to work your regular hours, then an employer must take reasonable steps to assist you at work. One option may involve working part-time or taking on flexible hours. An employer who has been requested to help in this way is obligated to assist as long as the request is reasonable.

If you suffer from long term ill health, some benefits can be claimed if you take early retirement. One of these is the Personal Independence Payment, and there are others for housing. If you cannot claim a full pension due to lack of contributions, the Employment And Support Allowance may be applicable.

Early Retirement – The Pros and Cons

Early retirement may be an option, but it can depend upon several factors whether or not this a good choice. If you own your home outright, have no debt and have a healthy savings account, then you can anticipate a decent retirement. However, some trade-offs will have an impact on your decision. So, looking at the advantages and disadvantages of early retirement is a worthwhile exercise before you take the plunge.

The pros of early retirement

Early retirement can look like the opportunity you have been waiting for. It is a chance to expand your horizons by travelling, taking up a long-awaited hobby or achieving a closer relationship with family and friends. All of these are valid reasons for wanting to retire, but like other choices in life, there are always consequences to be considered before you take action.

• Part Time Work And Higher Education
Taking early retirement can allow you to start a part time job in a new field of employment. In some cases, people fulfill their dreams by working at something that they have dreamed about all of their lives. If this is the case, then working part time may also allow you to go for a part-time degree or some other qualification that you have always wanted to achieve.

• Travelling Around The World
Of course, a lot of early retirees put travel at the top of their bucket list. If you have taken early retirement, the chances are that you are still healthy and active. So, many newly retired now spend their time in very active pursuits like hiking or mountain biking in remote places. However, extended travelling is costly, and this should be a consideration before you leave work.

• Spending Time With Family And Friends
An early retirement means you can invest more time with your family and friends. This means more quality time with children, elderly parents and a spouse. It also means that you can spend more time in your own home instead of spending the bulk of your waking hours at work.

The cons of early retirement

Working can often make people feel young, especially when they are around younger people. Some people may choose to continue working even after reaching retirement age and they say it keeps them vibrant with something to wake up for every morning.

• Access To Pensions And Savings
One of the cons of early retirement is that access to a private pension may be limited. Also, any pension package taken early, may cause a reduction in the amount you receive each month. If this is going to have a severe impact on your monthly income, then it may not be possible to enjoy all the aspects of retirement that you crave. If you find your monthly pension is not enough, you may be tempted to take out a quick loan with an instant decision. Borrowing money once you have stopped working could be difficult to repay, and payday loans should only be used with a clear plan of repayment.

Any savings that are invested in stocks and shares may benefit from being left in for longer. Look at your portfolio and consider the penalties for early withdrawal as well as the price of shares. Do this before you retire and not after, as the price of shares can and do take a hit just when you don’t want them to.

• Health Care And Insurance
Although the UK has the National Health Service, which is still free for all, leaving work early may mean the loss of private health care if that is part of your employment package. Additionally, as you get older the cost of travel insurance will increase, this can also affect the terms of a policy if you have a long term condition. As a result, those long trips abroad are going to cost more.


One of the most important factors to consider before taking early retirement is to think about how you are going to fill your days. If you do not have an interest in a particular hobby, you could find yourself with time on your hands and nothing with which to fill it except TV or gardening. Before going for your early retirement, you might want to get some advice from the pension advisory service who offer free, independant guidance on pension matters and can help resolve any problems you may have with your pension.

Additionally, taking early retirement is sometimes a trigger for adult children to use you as an unpaid babysitter. As our life expectancy is continually going up, the government has seen fit to raise the pension age – this is for a good reason. Unless you have a life plan in place that allows for early retirement, it is probably a better option to reduce your hours gradually at work until you are ready for final retirement.

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About The Author
Isla Williams
A born writer, Isla had her first article published at age 9 in a local magazine. Isla's joy emerges when pen strikes paper, and she can tap into her creative self. "I love to share knowledge/information and help others to be in the know while being as friendly as I can.” Isla is an accountant by profession but has taken a break to do what she enjoys most - writing.
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