Carla Morris, of Brewin Dolphin, said anyone planning to retire early would need to ensure they had made informed financial decisions, which include maximising their pension contributions and saving prudently.
Those who fall short of the large pension required should consider working longer. By working five years extra until age 60, a pension pot can last almost 20 years more, she said.
What constitutes a ‘moderate lifestyle’?
The “comfortable” standard of living is the highest echelon, according to the PLSA, but a “moderate” lifestyle would still be enough for a holiday in Europe for two weeks a year and eating out a few times a month.
This would require an income of £20,800 a year for a single person – or an additional £11,000 in personal pension money once the state pension age is reached.
According to Brewin Dolphin, a saver would need £410,429 in their pension by age 55 to be able to afford this standard of living without running out of money before 91.
A 50-year-old earning £40,000 would need to have already saved £300,000 and start contributing 20pc into their pension each year. They would also need a £25,000 Isa.
Ms Morris said: “For those with larger pension pots, retiring earlier can of course be possible, but you should bear in mind that for someone to retire at 55, they would need a £150,000 pension pot at 40 and making 12pc pension contributions to ensure they didn’t run out of money until 91, while drawing an annual retirement income of £20,800.”
A phased retirement could offer a good compromise, she added, and working part time can reduce some of the pressure on pensions, which would only need to top up a lower income level rather than immediately replace all earnings.
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