16 December 2025
general
Whether you want to travel the world or enjoy more time with loved ones, you may be dreaming of the day you can retire and live life your way.
But with minimum pension ages rising, many people may have to wait longer to fulfil their retirement dreams.
The State Pension Age is set to rise from 66 to 67 by early 2028, and again to 68 between 2044 and 2046.
Meanwhile, the normal minimum pension age (NMPA) – the age at which you can start drawing from your private pensions – is increasing from 55 to 57 from April 2026.
Nevertheless, with careful retirement planning, you may still be able to stop working at your preferred age. In fact, according to Just Group research reported by Fidelius, more than 3 in 5 workers retire before reaching the State Pension Age.
If early retirement is an aspiration of yours, read on to discover some benefits of stopping work sooner, as well as three financial considerations to help you successfully make the leap.
Early retirement may boost your wellbeing and give you more time to enjoy the things you love
You may be eyeing early retirement for numerous reasons. Perhaps you’re tired of your 9-to-5 or keen to lower your golf handicap.
Here are just a few advantages that early retirement may offer:
With all these benefits on offer, it might not surprise you to learn that 44% of 55- to 65-year-olds say their wellbeing has improved since retirement – as interactive investor reports. By comparison, just 31% of over-65s said the same, demonstrating the value of those earlier retirement years.
Crucially, of those aged 55 to 65 who did not say their wellbeing had improved, 45% said it was due to money worries. By creating a financial plan before you stop working, you could relax and enjoy your retirement without financial stress.
Here are three steps to consider taking for early retirement success.
1. Make consistent tax-efficient pension contributions
Naturally, retiring early will mean your savings will need to stretch over a longer period, with some retirements lasting more than 30 years.
What’s more, stopping work sooner will typically mean your pension pot has missed out on several years of:
Additionally, the sooner you start drawing down from your pension, the less opportunity those funds will have to grow with compound returns. So as you plan for early retirement, it’s important to mitigate the impact on your pension pot – by prioritising pension saving as early as possible, you can help maximise your compound returns over time.
Increasing your contributions could also lead to an additional boost from employers and the government. Some employers will match your contributions up to a certain level, while you can typically claim tax relief at your marginal rate on contributions up to your Annual Allowance.
Your Annual Allowance is usually either £60,000 or your full year’s earnings, whichever is lower. You may have a reduced Annual Allowance if you have flexibly accessed your pension or are a high earner.
A financial planner can help assess your budget to determine how much you can afford to pay into your pension, while maximising your employer contributions and tax relief eligibility.
2. Build accessible wealth outside of your pension
Private pensions are generally locked away until age 55 (57 from April 2026), often carrying substantial tax penalties for early withdrawal.
So, in addition to saving into your pension, you may choose to set aside funds that you can access at any time, such as with an ISA.
If you’re looking for tax efficiency and flexibility, you might consider a Cash ISA or Stocks and Shares ISA. You can normally access your funds at any time or after a fixed term, depending on the account you choose.
At the time of writing, you can pay in up to £20,000 a year across both ISA types without paying tax on interest or investment returns. Notably, from April 2027, £8,000 of the tax-efficient allowance must be used for investment, effectively reducing the Cash ISA allowance to £12,000 a year for under-65s.
Despite the upcoming restrictions, ISAs could still be a great way to build wealth in addition to your pension.
Outside of an ISA, there are several ways to build wealth and keep funds accessible for early retirement. A financial planner can help you determine the most appropriate options for you while maintaining a healthy balance against pension savings.
3. Consider rising living costs in your plans
When calculating how far your savings could stretch, it’s important to consider the rising cost of living.
To estimate how much you need to save for retirement, it’s often worth defining what your lifestyle might look like in retirement, and how your expenses might change over the years.
As a guide, Pensions UK has developed Retirement Living Standards, giving a high-level indication of how much different types of retirement might cost in 2025/26.
|
Lifestyle |
One person |
Two people |
|
Minimum |
£13,400 |
£21,600 |
|
Moderate |
£31,700 |
£43,900 |
|
Comfortable |
£43,900 |
£60,600 |
Remember, these figures reflect the cost of retirement in 2025/26. Since prices rise with inflation, your costs are likely to be higher by the time you stop working – and may keep increasing throughout your retirement.
In some cases, achieving your dream retirement lifestyle at your preferred age might not be feasible. As such, you could consider:
The choice is yours – but you won’t know what your options are unless you plan ahead.
Work with us
By working with a financial planner, you could get a clear view of how much your ideal retirement could cost. Considering your goals for your early retirement years through to your later-life plans, and accounting for inflation, we could help you calculate how much you may need to save to retire early and comfortably.
Email enquiries@jesellars.co.uk or call 01934 875 919 to find out more about how we can help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate cashflow planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
