Research from Aviva, published today (December 30), found out of 2,000 people surveyed, one in six who has taken early retirement did so when they were 60, making it the most common age.
Sixty is also the most popular target age for people who intend to retire early, with a quarter planning to celebrate their 60th birthday by leaving work.
This is because people aspire to enjoy retirement and the freedom that comes with it, while also being healthy enough to do so.
Another reason for taking early retirement was being financially stable enough to do so, with more than a quarter (26 per cent) saying this was the case.
But while more than two in three (68 per cent) people said their happiness had improved as a result, many soon realised early retirement came at a price with nearly half finding their finances had worsened as a result (47 per cent).
Alistair McQueen, head of savings and retirement at Aviva, 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.”
According to Aviva, women are the most likely to feel a negative financial impact from retiring early (50 per cent vs. 44 per cent of men).
Across both genders, only 22 per cent felt they had benefitted financially from their decision to retire early.
Aviva found some had returned to work or were planning to in the future because they either “wanted a new sense of purpose” or found themselves having experienced financial issues.
McQueen said: “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.”
Of those who took early retirement, a third said having a defined benefit pension helped, suggesting fewer people will be able to retire early in the future with the majority of people now saving into defined contribution schemes.
However, there are other methods people can use such as paying off a mortgage, which Aviva found was the second most popular method in securing an early retirement (30 per cent).
In addition, almost three in ten early retirees (29 per cent) said saving little and often was one of their main strategies and 19 per cent said they saved extra whenever they received a payrise or a bonus during their working life.
amy.austin@ft.com
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