It’s never too early to start thinking about your retirement. One question you’ll probably ask yourself at some point is ‘When can I retire?’

It’s really two questions rolled into one. Firstly, ‘at what age can you retire?’. The answer is that there’s no set age – it’s up to you and your circumstances.

The earliest age that you can start drawing on a personal or workplace pension is at the age of 55 but state pensions start later. Which leads to the second question: at what point will you be able to afford to retire?

Let’s start with the state pension.

When can I claim my state pension?

You can currently claim your basic state pension at the age of 66. However, successive UK governments have been gradually raising the state pension age because we’re all continuing to live longer than previous generations.

The state pension age for men and women increased to 66 in October 2020 and is set to rise to age 67 between 2026/8 and go up again to age 68 between 2037/39.

It’s worth keeping this in mind when planning your finances for the future, as it may impact some of the decisions you make.
In April 2021, the new full state pension rose to £179.60 per week. However, this amount depends upon whether you have paid full National Insurance contributions during your working life.

If you have gaps in your National Insurance record, it may reduce the amount you’ll get. You can opt to pay voluntary contributions
so that you receive the full amount in retirement.


How much money do I need to retire?

There’s no one-size-fits-all answer to this question. The amount of pension savings you’ll need to retire depends very much on the lifestyle you’d like in retirement. However, many of us underestimate how much we’ll need and are surprised at how large a personal pension pot we would need to achieve an income for life.

So what do the experts say? Let’s look at some research into what average retirees are spending. Which? did some research in 2020 which suggested that the average monthly spend for a household in retirement was £2,110 a month or around £25,000 a year. This was based on basic kinds of expenditure which added up to £17,000 per year on average plus some luxuries like European holidays, spending on hobbies and eating out.

We are all living longer, which means we all need to plan accordingly. Many people’s pension pots are not going to be enough to provide the level of income they’d ideally like.
According to a study carried out by investment bank, AJ Bell, the average worker will need a pot of £447,000 at 65 to maintain a good income until death.
Assumes 5% investment returns post charges, income inflation linked at 2% a year, pension fund runs out at age 100. Source: AJ Bell

Age UK has a handy retirement income calculator
which will help you calculate your likely retirement income.
woman on garden chair with dog

How do I draw up a retirement budget?

The secret is to start your retired planning early, rather than waiting until you retire. A good place to begin is to put together a retirement budget, which lists what your likely outgoings will be.

If you find you’ve got a shortfall in your retirement savings, you’ll have time to take corrective action sooner. In other words, topping up your pension while you’re still working.

There are some excellent online budget planners to help with your financial planning.

Can I retire early?

In the past, your only option was to retire at 65. Now, there’s no set age and you can retire whenever you want. If you’ve got enough in your pension pot to do what you want, you can retire at 55 since the rules around new pension freedoms mean you can start drawing lump sums or a regular income from pensions at that age.

Before you stop earning, you need to be sure your pot is enough to provide you with a retirement income in the future.

Do I have to retire?

There is no default retirement age, so you don’t have to retire if you don’t want to. Employers can’t ask or make you retire at a certain age, or stop you from carrying on working.

Some occupations have a retirement age that’s set by law such as the fire service, and some very physical jobs, like construction, may not be possible as you get older.

You can defer taking your state pension when you reach state pension age. You don’t need to do anything, it will just remain dormant until you take it and this could mean that you receive more when you come to claim it.

The importance of getting independent advice

If you’re thinking about carrying on working it’s a good idea to talk to an independent financial adviser about the best way to plan your finances so that you can make the most of your earnings and plan towards your financial goals for your retirement.

Want to find out more?

If you want to think more about your retirement, take a look at some other guides we have created that are designed to help you, from ways to boost your pension income to looking after your loved ones in retirement.

The information on this page was sourced between June - October 2020 and updated in April 2021. Information on this site does not constitute any form of advice, representation, or arrangement by us and you take full responsibility for making (or refraining from making) any specific investment or other decisions. You should take independent financial advice from an adviser who is registered by the Financial Conduct Authority.

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At Yorkshire Building Society we created Our Money Movement because we could see how most of the information for people approaching retirement was overly complex and full of jargon and hidden charges. Our aim is simple. To provide plain, straight talking guidance to help you make informed decisions about your financial future.