Whether that’s spending more time with friends and family or seeing the world, the good news is that it’s totally possible with the right planning. As the FIRE (Financial Independence, Retire Early) movement gains momentum among millennials, Express.co.uk asked a finance expert what steps people can take to make their dream a reality.
Sarah Pennells, consumer finance specialist at Royal London, said planning is essential if people want to retire early with enough savings to enjoy their new found freedom.
She said: “Many people drift into retirement rather than planning for it, but it’s really important to think about when you want to stop work and how much you’d need to save into a pension in order to do that.”
Even if people love their job, a decent sized pension pot could give them the financial independence and security they crave later in life.
Most people are going to need a workplace or personal pension to top up their state pension as the full new state pension of £9,339 a year isn’t enough for the kind of retirement they’d like.
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People who like a challenge could follow the FIRE (Financial Independence, Retire Early) movement.
This movement is gaining momentum after becoming particularly popular among millennials over the last decade.
It advises people to keep their expenses as low as possible when they’re young and reap the benefits when they retire early.
Many supporters of the movement suggest the four percent rule meaning someone would need to put away at least 25 times estimated annual living expenses.
“Shift your mindset. Instead of thinking of saving for your retirement as ‘giving up’ money today, think of it as helping you to live the life you want when you stop work.
““Find out if you can get more cash from your employer. If you’ve been enrolled into your workplace pension, your employer will pay into it. But some of them will pay in more than the ‘standard’ amount – and match any extra money you pay in pound for pound.
“Save spare cash towards your retirement. Check your bank statements or online banking app to see where your cash is going and whether you can cut back. A few pounds here and there will help towards your retirement pot.
“Plan ahead. Retirement may feel like a long way away – until suddenly it’s upon you. So take some time to look at what you’re currently saving, how much that could give you in retirement and whether there’s a gap. Use online calculators such as those on the government-backed Moneyhelper.org.uk website. If you’re aged 50 or over, you’re entitled to a free pensions guidance call with Pension Wise.
“Make sure you’re not missing out on your state pension. You may not get your state pension until you’re in your late 60s, but it will be a key part of your income in retirement. You can find out your state pension age on the Gov.uk website, and it may be possible to plug any gaps in your National Insurance record, if it will increase your state pension amount.”
