Thinking about early retirement? Here’s what you need to know about retiring early in the UK

For many people in the UK, the dream of retiring early feels out of reach, but with the right planning and conversations, it’s more achievable than you might think. Early retirement isn’t just about saving money; it’s about setting clear goals, making joint decisions with your partner, and preparing for the lifestyle you want later in life. 

Liz Hunter, our Commercial Director at Money Expert, explores how couples can take proactive steps, from discussing timelines and finances to planning for future care needs, to build a retirement strategy that works for both partners and brings peace of mind for the years ahead.

How can early planning for retirement help?

The foundation of any successful retirement plan is for a couple to sit down as early as possible and discuss what you both want from retirement. This should cover the type of retirement you want, the amount you think you’ll need, target retirement ages and any known future costs. 

Talking through retirement decisions as a couple can be hugely beneficial. It allows you to be open and honest with your partner about your finances and which gaps need to be filled. It also helps you both find a plan that suits you both and gives you the chance to work through any differences early on. 

Leaving big financial decisions to one partner means that the other is left in the dark, and could potentially lead to issues down the line. Not only could it lead to resentment, but it also means you are getting close to retirement and finding that you’re massively short of where you want to be, with little time to make it up. It could also leave one partner at a disadvantage if the relationship were to end or if one partner passes away. 

If you find yourselves struggling to come to an agreement or not knowing where to start when it comes to discussing retirement, you could sit down with a financial advisor. They will be able to make sure you’re covering everything, discuss your aims and options and come up with a plan that satisfies both of you. 

What discussions should you be having? And which areas could cause conflict?

Here are some things you should consider when discussing your plans for retirement to ensure you cover all bases:

When will you retire? 

Figure out when you both would like to retire - do you have a set age you’re aiming for or will you just know when the time comes? Do you want to retire together or at different times? These are the types of things you should consider when starting to plan your retirement. Sometimes going from working to suddenly being together all the time can cause problems as you figure out what you each want to do. 

In some cases, it may make sense for one of you to retire before the other. Either due to health reasons or so that you aren’t on top of each other. Plus, the later you draw on a pension, the higher the likely income the pension will provide. A delay of just five years could have a huge impact on retirement income, especially if contributions continue to be made into a work pension scheme that is matched by your employer and has the benefit of tax relief. 

Feeling resentment towards your partner if they’ve retired before you can be difficult but it is understandable. It can bring about a lot of changes in dynamics, responsibilities and emotions. It’s important to acknowledge these feelings as soon as possible and know that they are normal. Take some time to reflect on why you feel that way and have an open conversation with your partner about it. This can help them understand your perspective, leading to finding solutions together. Prioritise self-care and set boundaries and responsibilities. Knowing who is responsible for what and when can help create a sense of balance. Remember - you’re both on the same team. Work together to set financial goals and discuss how you can support each other during the transition, which can help strengthen your relationship and find a solution to any problems.

How will you fund retirement? 

Research carried out by the Retirement Living Standards found that the minimum a couple should allow for to cover a basic lifestyle is around £22,400 per year. While you’d need around £59,000 to enjoy a more comfortable retirement. Although this would vary depending on where you live, your current financial situation and whether you have a mortgage to pay or not. Planning for retirement and how much you’ll need can be a difficult topic to tackle, particularly if either of you have any debts, and if you have children and are looking to help them out either by supporting them through university, buying a home or planning a wedding. 

As a couple, take some time to sit down together and calculate how much you think you’d need to retire comfortably. This can be cross-referenced with the amount you’re actually expected to receive, giving you a better idea of what steps to take next in order to improve that amount. You’ll need to consider your monthly outgoings, any debts you’re making payments to, and factoring in any other costs you regularly make. Consider the fact that you may need to pay for care in future too, which can be costly, so it may be worth saving up a little more if you can to ensure you can cover everything. 

If either of you have any debts, then it is worth considering trying to get them paid off before you retire to avoid struggling come retirement. Many couples look to downsize during retirement if they don’t need the additional space, which could help provide more money towards retirement. 

You’ll also need to consider your risk profile and what you’re both comfortable with when it comes to investment. Are you adventurous and want to make riskier investments in the hope of a higher return? Or are you someone who would prefer a slow and steady return over time? It’s perfectly normal to have different opinions but you’ll need to work this out early on so that you know where you stand and what you’ll be doing with any savings. If you are both different you could separate savings so that one can be more adventurous, while the other can take things slower and invest funds that can be invested for long term life events such as care needs. A financial advisor will help you understand the concept of investment risk and your capacity for loss, allowing you to settle on an approach to risk to help you reach any financial goals.

Where will you go?

It’s important to discuss what you’ll be doing during retirement, along with where you will go. Will you stay in the home you’ve built together? Or if you own your home, will you sell and downsize to make more money for retirement? You could even want to move abroad. This could cause conflict as one of you may not be willing to move away, but it’s important to discuss before you retire so you can get the ball rolling before retirement. You’ll also need to discuss this with friends and family too, as they’ll want to know if you decide you’ll be leaving the country. 

Planning for all futures

Planning for retirement doesn’t necessarily mean you’ll be spending it together as no one can predict the future or where you will be in 10 years’ time. This means it’s important to plan for all eventualities and ensure that you’re both protected and sufficiently provided for. It may be that one of you earns more than the other, or one of you may have a lot of health issues. This means that a plan should be put in place to make sure you both get the retirement you want. 

Protecting against accidents and illness is important too and making sure that you have the required legal paperwork to act on one another’s behalf is key. Lasting Powers of Attorney (LPA) offer the ability to designate decision making to someone else for finance, property, health and welfare if either of you fall ill and are suddenly unable to make sound decisions. In addition, making sure wills, life insurance and pension nomination forms are in place and up to date should be high on the priority list. 

It’s also important to check that you’re both aligned for the potential of one or both you needing help later on in life. Does this impact on the rest of the family and any care arrangements you may have with grandchildren, for example? Discuss your options with another family member, like one of your children or a sibling, to ensure that someone else is aware of your plans in case both of you fall ill or need to go into care.