Investing for early retirement

Leaving the stresses and strains of work behind is an attractive prospect, especially if it’s earlier than you’d originally planned. But it’s a decision full of potential pitfalls. That’s why good financial planning and a careful investment strategy for early retirement are essential. This is where we can help - book a free consultation below. 

How to make an early retirement plan

Although it sounds tempting, stopping work early increases the amount of time you’ll need to draw money from your retirement funds and decreases the amount of time you have to generate an earned income. Your investments will need to be structured carefully, so the sooner you can start planning your early retirement the better.

How much money you’ll need will depend on how you intend to spend all that free time, so it’s important to think about this and remember a lot will change over the years, as you could be retired for a long time. Planning for the different stages of your retirement, and for the unexpected, will be important.

Our independent Wealth Planners can help you consider:

1. What you can afford

Early retirement means relying solely on your savings and investments for longer. So, you need to think carefully about what you can afford and to paint a complete picture of your finances. Do you have any unsecured or mortgage debt that needs to be considered? Do you have a complete picture of all your available pensions and investments, including the state pension?

2. How long until you retire

How long you have until you take early retirement can make a big difference to the sorts of things you might invest in and the level of risk you are able to take. The longer you have, the more time you have for your investments to work hard for you.

3. Your retirement plans

In retirement, you are likely to find yourself with a lot more leisure time. How do you intend to spend that time and how much is it going to cost? Are you going to go on more holidays, join a golf club, buy a camper van? Spend some time thinking about what retirement might look like as it could affect your investment strategy.

4. How many years you may be retired

If you expect to live to 90 and you’re only 55, you’re going to be retired for as long as you were working. Your investment plans will need to take account of your different income needs throughout this time, from your younger, perhaps more active years to your later years, which may take on a slower pace. You may also want to factor in the costs of later-life care.

5. Your attitude to risk

The right level of investment risk to take is a difficult thing to pin down. You may not want to take any investment risk at all. However, by keeping your cash in the bank it’s highly likely that inflation will erode the value of your retirement savings over time. On the flip side, if you take too much risk, a significant economic shock could severely impact your ability to fund your early retirement. Finding the right approach to risk is a key element of any early retirement investment strategy.

6. How things might change

Over time it’s likely that your objectives and the way that you think about your life will change. Everything around you will change too - markets, the cost of living, health of the economy, your family circumstances - everything will have an impact on your money and how it works for you. You need to be able to adapt and change the way in which you invest over time so that your approach remains suitable and aligned to your goals.

Investing for early retirement – how we can help?

Even if you are in the lucky position of having considerable retirement savings, knowing exactly how to invest to ensure you can retire early can be daunting. Our personal Wealth Managers have the expertise and importantly, the independence to advise you on the best way forward.

Your dedicated personal Wealth Planner can:

• Review your current financial situation and help build a diversified investment portfolio suited to your individual needs
• Take you through a cash flow planning exercise and let you know if early retirement is realistic and achievable
• Stress-test their plans against various scenarios such as market falls and rising inflation, so you can feel confident in your future plans
• Determine the best investment strategy to help you retire early
• Review your plans on a regular basis and make adjustments as and when they are needed.

Early retirement calculator – when could you retire?

Use our simple retirement calculator to work out how much you might need now to retire early. You can do this by working out how much money you have saved for retirement now across your various pension, investment and savings accounts, and projecting your total retirement savings into the future.

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If you would like to know more about how our independent Wealth Planners can help you invest during retirement, please get in touch. We will be delighted to provide more details of our services.