MONEY TALK: Alex Grant looks at retirement
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There are many factors that can influence when someone decides to retire.
For some it may be based on health, while others may want to take advantage of government benefits or enjoy a relaxed lifestyle. However, one of the most common factors that determines when people choose to retire is age.
- Wanting to enjoy more freedom:
One in four are planning to celebrate their 60th birthday by leaving work behind. With the State Pension age currently 66, the findings show one in six people who have taken early retirement did so when they were 60, making it the most common age to make an early exit from working.
This is also the most popular target age for people who intend to retire early in the years ahead, with one in four planning to celebrate their 60th birthday by leaving work behind. The desire to retire early is primarily driven by ‘wanting to enjoy more freedom while still being physically fit and well enough to enjoy it.’
- Embracing a new lifestyle:
Nearly one in three people (32 per cent) who have retired early or plan to do so gave this reason for embracing a new lifestyle.
Financial security is the second most common factor prompting people to embrace retirement. More than one in four (26 per cent) early retirees say their decision was a result of ‘being in a financially stable position’ so they can afford it. The influence of money matters is also visible in people’s choice of early retirement age. One in five people targeting early retirement have set their sights on 55 to make the transition from working life.
- Too taxing and stressful:
Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to then in life (23 per cent), wishing to spend more time with family (20 per cent) or finding they are either ‘tired and bored’ of working (19 per cent) or find it ‘to taxing and stressful’ (19 per cent).
The research suggests the impacts of early retirement are wide-ranging and broadly positive. Most notably, more than two in three (68 per cent) people who have retired early say their happiness improved. In terms of the world around them, 44 per cent of early retirees say their family relationships improved and 34 per cent reported improvements in friendships.
- Boost to wellbeing:
When it comes to their health and wellbeing, more than half report early retirement has delivered a boost to their mental wellbeing (57 per cent) and half (50 per cent) say physical wellbeing improved.
However, the findings suggest these benefits come at a cost, with nearly half of early retirees finding their finances worsening as a result. Women are most likely to have felt a negative financial impact from retiring early (50 per cent vs 44 per cent of men). Across both genders, only 22 per cent feel they have benefited financially.
- Stepping stone to retiring early:
Among those who have retired early, one in three identify having a defined benefit (final salary) pension among the main measure enabling them to take retirement into their own hands.
This suggests early retirement may get harder for younger generations. However, the findings suggest people can still take positive steps to make early retirement possible. Paying off your mortgage (30 per cent) is identified as the second most common stepping stone to retiring early, while almost three in 10 early retirees say saving little and often was a key strategy.
- Alex Grant is director of Alex M Grant and Company Ltd.
