A survey by Aviva shows the factors influencing early retirement decisions.
Sixty is the most popular age for early retirement, according to new research from insurance firm Aviva.
Its survey of 2,000 UK respondents who are planning to or have taken early retirement shows one in six (17%) people who have taken early retirement did so when they were 60 [the current retirement age is 66] and one in four (25%) who are yet to retire say they plan to do so at 60.
The desire to retire early is primarily driven by “wanting to enjoy more freedom while still being physically fit and well enough to enjoy it”, with 32% choosing this option.
Being in a financially stable position so they can afford not to work was chosen by 26%. Financial security is a key factor in early retirement decisions with 20% choosing 55 as the right time to make the transition from working life. This is likely to be influenced by their ability to access their pension savings from this age, says Aviva.
Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to them in life (23%), wishing to spend more time with family (20%) or finding they are either “tired and bored” of working (19%) or find it “too taxing and stressful” (19%).
Aviva’s research suggests the impacts of early retirement are wide-ranging and broadly positive in many areas of life. Most notably, more than two in three (68%) people who have retired early say their happiness improved as a result. 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships.
When it comes to their health and wellbeing, more than half report that early retirement has delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved.
However, nearly half of early retirees find their finances have worsened as a result (47%). Women are the most likely to have felt a negative financial impact from retiring early (50% vs 44% of men). Across both genders, only 22% feel they have benefitted financially from their decision to retire early.
Among those people who have retired early, one in three (32%) identify having a defined benefit (final salary) pension among the main measures that enabled them to take retirement into their own hands. This suggests the concept of early retirement may get harder for younger generations to achieve, with the majority of the private sector workforce now saving into defined contribution pension schemes, says Aviva.
However, it advises that people can still take positive steps to make an early retirement possible, such as paying off a mortgage and saving throughout their working lives.
Among those who take early retirement, the research also reveals there is a small contingent who have returned to work (17%) or envisage themselves doing so in the future (15%). Over one in four (27%) say this is because they “wanted a new sense of purpose”, 26% cited “missing the company and social interactions with colleagues” and 24% said they returned due to financial issues.
Alistair McQueen, Head of Savings & Retirement at Aviva which has a Mid-Life MOT app which helps people plot a realistic course towards retiring early, said: “The turbulent times we’re living through have given many people pause for thought to consider their work-life balance and think more seriously about what makes them happy. Our findings suggest the dream of an early retirement is very much alive and kicking, but there are many factors to consider along the way and the current uncertainty about the future does not make this an easy decision.
“The experiences of people who’ve already reached early retirement show that small savings habits, which add up over time, are every bit as important as big gestures such as putting aside any year-end bonus.
“It’s also important to learn from the lesson that, while happiness soars in retirement, many people find their finances take the strain when they retire early and money worries are one of the biggest factors resulting in people returning to work. If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long-term.”