When Can I Retire in the UK?

Retirement is when an individual chooses to stop working and it’s your responsibility to discuss when and how to retire.

There is no legal retirement age, so knowing exactly when you can retire depends on several factors, such as how financially prepared you are and the ways that changes in legislation could affect you.

While there are ‘typical’ timescales for taking retirement, it’s ultimately your choice. In this article, we’ll walk you through the details that could affect your decision to leave work behind.

What is the retirement age in the UK?

There is no set legal retirement age anymore – now, the timing of your retirement depends on your circumstances.

Previously, employers used to be able to force workers to retire at 65. This was known as the ‘Default Retirement Age’; however, this law was scrapped in April 2011.

There are specific circumstances where a worker can be forced to retire, but the employer must have a good reason why.

You may be asked to retire early if your job requires you to have a certain level of mental or physical abilities or has an age limit set by another law.

In this instance, your employer must follow a fair procedure and give you enough notice.

Set a goal by deciding how much you will need per year in retirement, and how long you expect to be retired for. Through this, you can calculate how much you’ll need to invest each month over a specific period to achieve your goal. However, you’ll need to factor in that this will only be an estimation as good performance is never guaranteed.

You can get an idea of your ideal retirement age by preparing now:

Calculate your expected income: Your financial situation, which includes building up a sufficient pension pot, is an important starting point. Consider all sources of retirement income, including the State Pension, personal or workplace pensions, income from savings, investments and any other income streams. When investing in a pension pot, pension eligibility and tax rules apply and you should ensure your contribution does not result in your total pension contribution within the tax year exceeding £60,000 or 100% of your earnings, whichever is lower.

Assess your expenses: Estimate your monthly and annual outgoings in retirement. You may need to budget for household expenses, such as mortgage payments, rent, bills and food expenses or renovations, along with leisure activities and other lifestyle costs. 

Review your savings: Evaluate your current savings and investments to establish whether you have enough to cover your retirement expenses. Use retirement calculators and consult with a financial adviser for a detailed assessment. With investing, your capital is at risk.

Financial advisers can also help you in trying to determine how much you would require in retirement and whether you’re currently on track to achieve that goal.

There are other considerations you might need to make that are personal to you. For instance, your health can significantly impact your retirement timing and planning. You may need to account for potential healthcare expenses and weigh up how they might affect your savings and retirement age.

How soon can I retire?

If you start making plans early and keep up with any changes in your circumstances that could affect your pension pot, you could potentially retire sooner than the current State Pension age.

The minimum age at which you can start accessing your personal or workplace pension in the UK is currently 55 – although this is due to increase to 57 in 2028. It could be useful to think about how much more your money could be worth if you invest it for longer, however, it’s important to remember as with any investment, the value of your pension and any income may fall as well as rise and is not guaranteed.

The Normal Minimum Pension Age (NMPA) is the minimum age you need to be to withdraw/use a personal pension. This was introduced in 2006 and was increased from age 50 to age 55 in 2010. The government announced it would “increase the NMPA to 57 in 2028 to coincide with the rise of the state pension age to 67”, confirmed in a policy paper published in 2021.

Do I have to retire?

If you choose to work beyond State Pension age, your employer can’t legally discriminate against you for choosing not to retire. Some people look to work beyond age 66 for many reasons, such as boosting income beyond what a pension alone would provide, or to stay mentally and physically active.

Investing part of your salary into a pension could be tax efficient, so you may want to work a little bit longer to put more money away. Additionally, the longer you leave your money invested, the better your chances of being in a good financial position when you reach retirement age. However, you must remember that with investing your capital is at risk and you may get back less than you invested.

Some people look to work beyond age 66 to maximise their retirement wealth, so it’s totally acceptable if you want to do this.

How True Potential can help you work out when you can retire.

Retirement is an inevitable stage in life, so the earlier you start saving for it, the more likely you’ll reach your long-term financial goals.

If you choose to set a goal, one option is to regularly invest to close the gap to said goal. While the triple lock and State Pension provide a foundation, you may wish to consider other investment options depending on the lifestyle you envision in retirement.

If your pension is invested in a portfolio, for example, you could benefit from growth in the funds in those investments, known as compound growth. This is the process where the “earnings or returns generated from an investment are reinvested, leading to exponential growth over time”. This can have an almost snowball-like effect, potentially accelerating your wealth accumulation over time.

Over the long term, you could build a pension that could help you to retire in the way you want.

However, you must be wary. Financial markets can be volatile, which in turn can disrupt the compounding process – leading to lower returns or even losses. And while compound growth can help your investments grow, it may not always keep pace with inflation.

While investing does give you more potential for growth, good performance is never guaranteed. Investing typically involves more risk than saving, as your money is exposed to the volatility of the markets you invest in. While there can be potential for greater returns you could also get back less money than you put in.

You could also consider investing in different pensions or increasing your contribution in a workplace pension. Our advisers can help you create a detailed retirement plan that helps you reach your retirement goals and establish how soon you can retire.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.

Pension eligibility and tax rules apply.

Contact us to find out more about how we can help you look to the future.

True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales as a Limited Liability Partnership No. OC356027.

True Potential Wealth Management is authorised and regulated by the Financial Conduct Authority. FRN 529810. Registered in England and Wales as a Limited Liability Partnership No. OC356611.