Exactly What Date Can I Retire?

Exactly What Date Can I Retire?

More people than ever are asking the question how soon can I retire. Some have a fear that inflation and cost of living will eat up all their money.

This is a question that many people are asking themselves right now for many reasons. It could be they are not enjoying the long slog of the commute or have had a taste of what else they can do other than work during the lockdowns.

During the pandemic, at least 250,000 additional professionals aged 50-64 left the workforce in the UK, and over 3,000,000 million Americans retired early (Source: Financial Times), and you may be wondering if they made the right decision based on current inflation rates and rising cost of living.

Everyone’s situation is different, and whatever the reason you want to retire, it’s important to have a solid plan in place so that you can retire when you want to, and not when you have to!

In this article we shall discuss the steps to pinpoint the exact date you can afford to retire.

Calculate the combined value of all of your pensions and savings

The first step is to calculate how much you have in all of your pension pots and savings. This includes any personal pensions, workplace pensions (including any from previous employers), and any other retirement savings such as ISAs which you may have.

Once you know how much you have in each pot, seek advice on whether it’s beneficial to combine all your pensions into one. Then you can then start to look at how much income you could potentially receive in retirement.

Complete a retirement cashflow planner

The next step is to complete a retirement cashflow planner. This will help you to understand how much income you will need in retirement and whether your pension pot(s) will be enough to provide this.

A retirement cashflow planner takes into account your current expenditure, any debts that you have, and any other income that you may have in retirement (for example, rental income)

It’s important to be realistic when completing a retirement cashflow planner as it will help you to understand what lifestyle you can afford in retirement and whether you need to make any changes now in order to achieve this.

Consider large one off purchases or expenses

Once you know how much income you will need in retirement, you need to consider any large one off purchases or expenses that you may have. For example, you may want to buy a holiday home, renovate your existing home, help your children with a deposit for their first home, or pay for a wedding.

It’s important to factor in these costs as they will impact how much income you will need and whether your pension pot will be enough to provide for this.

Determine whether your pension pot will last your lifetime

Once you have considered any large one off purchases or expenses, you need to determine whether your pension savings will last your lifetime. The number one question on everyone’s mind is “will I run out of money in retirement”. 

Take advice from a reputable Independent Financial Advisor (IFA) who can provide you with guidance on how long your pension pot may last you!

Take into account inflation and market fluctuations

Finally, you need to take into account inflation and market fluctuations when looking at your pension pot. This is because over time, the value of money decreases due to inflation (and it’s never been more evident than right now) and the stock market is always in a state of fluctuation, which will impact your pension pot.

Don’t be left short, a retirement financial planning specialist or IFA can work with cashflow modelling tools to help you understand how this will affect your pension pot.

Find the right Independent Financial Advisor (IFA) for you

Planning your retirement and determining how soon you can retire is much easier when you work with an Independent Financial Advisor (IFA).  We’ve written a handy guide on How to choose an IFA  and if you’re not sure what to expect of an IFA, here’s what Independent Financial Advisors do for you.

Finally, how soon can you retire? The answer to that question depends on a lot of factors. By using the right tools and taking into account all of the information we’ve covered, you have the outline of a plan. Most people find it a bit daunting to take themselves through this process, which is why we are here to help.

Why struggle? There’s an expert team ready and willing to help you start the ball rolling.

Call us now on 0121 355 4455 or schedule a call with one of our advisors by emailing appointments@oaklandswealth.com – we’d love to help you find the exact date you can retire on so you can get on with life after work!