News & Blog

Retiring Early: Optimistic or Pessimistic?

13th September 2018

Derek Dryden, Wealth Planning Adviser in our Northallerton office, discusses the ways you could retire early.

My LinkedIn profile statement says, “ASK ME HOW I HELP BUSY PEOPLE GET THEIR FINANCIAL GAME PLAN ORGANISED: BUILD ASSETS, RETIRE EARLY AND PAY LESS TAX” – feel free to have a look and follow me for lots of great news & views.

Check out Derek’s LinkedIn profile here.

Does the thought of retiring fill you with joy or dread? Given a choice, would you rather be in a position to stop work when you want, or is that idea, not something that excites/motivates you?

When advising my clients on the topic of their retirement, I explain that there is no such thing as generic retirement advice, as we are all different, and when I ask clients to tell me, “what does your retirement look like?”, I never get an identical tale. Try it: think about what you want your retirement to look like, and then ask your best friend or sibling…….ahhh, the freedom choice gives you…..and your imagination.

Now the modern way of retiring seems to be a little different to the traditional model of working full time one moment, then completely stopping the next. Many folk seem to be concerned that they might struggle to fill their time, or wonder if they would get bored if they followed that method, and so prefer to opt for a graduated retirement, where possible, when they reduce their working week from 5 days, to 4, to 3…….easing themselves (and their spouse) into their new non working life.

The two consistent challenges for people envisaging their retirement are, “how much income will I need when I retire?” and “when do I want to slow down/stop?”

My philosophy for ALL financial planning is that whatever reason you have for engaging in the process, it is all about providing you with choice. These choices include having enough money to do the things you want to do in your working life, providing financial options for you and your loved ones if you are off work, or suffer a serious illness, and of course making the decision about when you retire more about timing, rather than, “Can I afford to?”

The absolute key to putting yourself into a position to enjoy life’s financial choices are all about starting early. If you read this and think you have missed that window of opportunity, the second important decision you need to make is to engage a professional adviser and have your situation evaluated and then they can help you formulate a plan of action.

There are all kinds of solutions you can consider: of course, the easiest (which is also sometimes the hardest) is make sure your fund levels are correct, as paying £50.00pm into a pension is probably not going to give you the retirement pot you seek, unless you started at age 7. The second most important consideration is your investment risk level: the difference in investment returns for folk adopting a low-risk profile is hugely different for those accepting a higher risk investment profile.

Remember, time is the key to investing: fully understanding the relationship between risk and time (invested) are absolutely fundamental to getting your money working harder for you.

I have tried to cover the very basics of the decisions you need to consider in order to give your retirement the very best opportunity of delivering on your ambitions, but the only way to truly understand what all these mean for YOU, is to seek independent professional financial advice.

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