Younger generations may be forced to work well into their 70s yet the early retirement dream lives on for many baby boomers retiring this year., according to Prudential.
Research by the provider revealed six out of 10 (60 per cent) of those giving up work this year are doing so earlier than their projected state pension age, or company pension scheme retirement date.
The insurer’s annual study shows that those members of the class of 2017 who are planning to retire early this year are even willing to take a hit on their expected retirement income, to the tune of £1,250 a year, in exchange for giving up the daily grind.
The findings are based on an online survey among 10,605 non-retired UK adults, including 1,000 intending to retire in 2017.
Those who are planning to work until their retirement date expect to retire on an income worth £18,900 each year, compared to the £17,650 expected by people retiring early.
However, this year’s retirees who are planning to quit the rat race early feel better-prepared when it comes to their retirement than those who are not stopping early, with 60 per cent of those taking early retirement saying they are financially well-prepared, compared with 46 per cent of those working towards their retirement date.
The early retirees are also more relaxed and confident about retirement than those who plan to work for longer, with more than half (56 per cent) expecting to have enough income for a comfortable retirement compared with just two out of five (38 per cent) of those who are not retiring early.
This confidence can be explained, in part, by their focus on pension saving.
Those who are retiring early, are more likely to have saved into a pension scheme – 86 per cent compared with 71 per cent who are not stopping work early.
Just 10 per cent of early retirees have no pension savings, compared to 21 per cent of those who aren’t planning to retire early.
They are also more likely to have sought professional advice, with seven in 10 (70 per cent) having spoken to a professional financial adviser, compared to 57 per cent of those planning to wait until their retirement date.
Commenting on the research, Vince Smith-Hughes, retirement expert at Prudential, said: “It is encouraging that so many of this year’s retirees are able to give up working early, in order to enjoy an even longer retirement.
"However, many of this year’s retirees will have also benefited from some generous final salary schemes – something which only a handful of those in future generations will benefit from. As a result, the retirees of the future who are hoping to retire early will need to start preparing well in advance, setting aside as much as they can afford as early as they can.”
Jane Hodges, managing director of Money Honey Financial Planning, said the research echoed her own experience.
She said: “We find many people take early retirement from their main job but use their pension to finance a second career with a more flexible working pattern. For instance, my father-in-law at 70 is an electrician is not working because he has to but because he enjoys it.”