Retiring at 60 is a financial goal that many people share. In the UK, there are no restrictions on retirement and most people can access their pension in their 50’s, although your State Pension will not be available until you reach your mid 60’s.
Good financial planning is essential if you want to maximise your savings and retire comfortably at 60. Here is everything you need to know if you want to retire at 60.
Can You Retire At 60?
Certainly, retiring at 60 is a viable choice while still working. Your work options remain flexible – there’s no fixed limit on working hours during retirement.
Do You Want to Retire at 60?
Retiring at 60 has many advantages. It will allow you to enjoy your life while you’re still young and give you the freedom to pursue your goals e.g. to travel or start a new business venture. You will also have more time to spend with your family and do the things you enjoy in life.
That said, there are some drawbacks to keep in mind. For instance, you will typically have a smaller pension pot if you retire younger, meaning you’ll receive smaller monthly payments into your bank account.
Some people also lose their sense of purpose when they stop working and experience boredom and loneliness. According to Kiplinger, you can stay happy in retirement (and beat boredom) by finding activities that bring you meaning and joy in retirement e.g. learn a new skill or volunteering at a local charity.
What is a Good Pension Pot at 60?
The average pension pot in the UK is almost £50,000. However, knowing how much the average person has in their pension savings will not help you retire early.
A ‘good’ pension pot will allow you to enjoy a comfortable retirement and do all of the things that you want to do without worrying about money. Carefully consider your retirement expenses and the lifestyle you want to have to help you determine how much you will need in your pension pot.
What Income is Needed in Retirement?
The amount of income you need in retirement will depend on your lifestyle and plans for retirement. Here are some things to consider when calculating your retirement income:
- Will you be spending less on commuting?
- Will you need more money to pay for travel, holidays or expensive hobbies?
- Will you buy a new car?
- Will you downsize to a smaller house?
If you’re still unsure, then try applying the 70% rule. This states that the average retiree requires 70% of their normal working income to maintain their lifestyle. So, if you currently earn £2,500 per month, you’re looking for a retirement income of £1,750 per month.
Do You Have Enough Money to Retire at 60?
The 25x rule is a good way to check whether you have enough money in your pension pot to retire at 60. This rule says that you need to save 25x your retirement expenses before you retire. So, if you spend £25,000 per year, you’ll need £625,000 in pensions, investments and savings.
However, most people receive regular pension payments such as their State Pension, financial salary pension, or another form of capital e.g. rental income. You need to deduct this from your retirement expenses. For example, if you spend £25,000 per year and receive £10,000 in retirement income, then the actual amount you need to have saved each year will be £15,000.
How to retire at 60 without Running out of Money?
If you choose to retire at 60, then there is no guarantee that you will make it to the end of your life without draining your pension pot. The easiest way to protect yourself from this risk is by purchasing a pension annuity. This will provide you with a guaranteed income for life.
That said, pension annuities provide a very low income, so you will still need to save up a significant pension pot before you can retire comfortably. You can also put your money into a drawdown pension. This is where you keep your pension pot invested and take money as and when you need it.
Can Prosperity Wealth Help you Retire at 60?
Many people can retire at 60 and live a comfortable and financially secure lifestyle. At Prosperity Wealth, we have many years of experience in financial planning and we can help you build a retirement income plan and stay on track to retire at 60.
Book your Consultation today
If you want to find out more about retiring at 60, then you can schedule your free retirement consultation today. One of our financial advisors will discuss your plans for retirement and how we can help you to achieve them.