There is no longer a set age at which you have to retire and can no longer be employed / continue to work. It’s basically up to you to make the decision as to when you stop working, and you can retire early if that’s what you choose…....but plan carefully. You’ll need to be in a stable financial position, and to know that you can properly fund your retirement, several years before you finally give up work.  

So, a better question would be when can I access my pension savings, and also how much will I need in total to live comfortably in retirement? Read through our FAQ guide below for a few tips, and then get in touch with our expert team of advisers for an appointment to discuss your personal circumstances and needs. Our impartial team of experts can guide you through every eventuality to help you create your very own retirement plan.

Do I have to retire? 

Actually, no you don’t, so long as your employer is happy for you to continue to work on. In the UK, there is no longer a law that states you have to retire at a certain age. Now it’s all up to you, how you feel and of course what you can afford. In the past, UK companies all applied a default retirement age, which meant all employers compulsorily retired workers when they reached the age of 65, no matter whether the employee wanted to retire or not. This compulsory retirement ended in 2011, to reflect the fact that people were living for longer and able to work for longer. It is still possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it (good examples here would be both air traffic controllers and the police force). However, most UK workers can no longer be forced to retire on the grounds of age alone now, and most can choose their retirement age. 

When can I claim the state pension? 

We’re all now eligible for our state pensions at a later age than ever before, because the rising state pension age means that people are getting their government-provided income at a later age.  As of December 2018, men and women qualifying for the state pension began to receive it at the same age for the first time - initially this was set by the government at the age of 65. The state pension age is then due to increase to 66 in October 2020, and to increase again to 67 in 2028. 

In July 2017, the government announced its intention to increase the state pension age further, from 67 to 68 sometime between 2037 and 2039, which is seven years earlier than previously planned. This means that those born between April 1970 and April 1978 can reasonably expect their state pension age to be 68 rather than 67, even though this hasn’t yet been approved by parliament, the change is still likely to happen. 

How much is my state pension?

A couple claiming the full basic state pension will receive a minimum of around £13,100 per year under the old system and approximately £17,100 with the new state pension (if both receive the full level of new state pension).  Depending on your employment history, you may also have private pension pots to consider and factor into your retirement equation. Seeking independent , professional advice will give you the best opportunity to discover exactly how much money you will have available to you in retirement.

How much will I need to live on in retirement?

The answer to that is complex, and varies tremendously from person to person. It depends on your personal financial circumstances, your lifestyle, how much longer you’re going to be working for, how much extra you can save between now and retirement and many, many other factors. To get the best possible advice, you should sit down with an independent financial adviser to get their advice on what you should be doing.

Can I get my pension at age 55? 

If you’re in a defined contribution pension, you could be able to access your pension fund at 55. At this point, you may also be able to withdraw up to 25% of your pension tax-free as a lump sum. However, be aware that some schemes will have a 'normal' or 'selected'  retirement age, and, if you access your pension plan before this date, you may incur an early exit penalty. You should always check with an expert before making any decisions about withdrawing lump sums from your pension, or taking your pension early. This includes circumstances like being seriously ill and needing to access your money early. Although this could be arranged directly with your pension provider, depending on the circumstances, you’re still better off if you get the proper advice first.

When is the minimum pension age increasing?

Being able to access pension savings at 55 will only be an option for the next few years. The government intends to increase the minimum age at which you can access personal pensions to 57 in 2028, so that it will remain 10 years before you are eligible for the state pension which itself rises to 67 in the year 2028. 

What effect will early retirement have on my pension? 

If you give up working early, your state pension could be lower than if you remained at work, and it’s always best to take advice before making any decisions. 

Your state pension could be affected in you finish work early because the amount of state pension you receive is based on the number of years' worth of National Insurance contributions you have made. You need 10 years' worth of contributions to get any state pension at all, and 35 years' to get the full state pension, which is currently £164.35 a week. 

If you retire early without the maximum number of years, you could get a lower state pension amount when you reach state pension age. You can find out how many years you currently have by checking your state pension forecast or consulting with one of our expert team of advisers. 

In terms of a private or workplace pension, early retirement can also carry some risks. There’s an immediate risk in cashing in a private pension early, in that you may run out of money in retirement. So if you really do want to retire early, you need to plan carefully to make sure that you have enough to live on in retirement.  

Another risk is that you could also severely limit how much you can contribute to a pension in the future by accessing your savings early.  For example, people generally are unaware that if they withdraw cash beyond their 25% tax-free lump sum, they could trigger something called the 'money purchase annual allowance' and this would in turn reduce the amount they can pay into a pension each year down from £40,000 to just £4,000. 

Because of these serious issues and risks, and in order to make sure you’re doing the right thing, you really should speak to an expert before you make any decisions, and certainly before you act on anything.

Start planning your future. Speak to us today.

Contact Us

Seventy Financial Planning
The Apple Store, Haggs Farm,
Haggs Road, Follifoot, Harrogate,
HG3 1EQ

01423 611004

[email protected]

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