Early retirement most popular at 60

Sixty is the most popular age to retire early, with one in four (25 per cent) savers planning to celebrate this milestone by leaving work behind, according to research from Aviva

The most common driver for early retirement, cited by 32 per cent of respondents, was to embrace a new lifestyle and to have more freedom whilst still being physically fit and well enough to enjoy it.

A further 26 per cent hoped to retire early as a result of “being in a financially stable position” and being able to afford not to work, with 20 per cent of those targeting early retirement aiming to make a transition from working life at age 55.

However, whilst more than two-thirds (68 per cent) of respondents reported an increase in their overall happiness as a result of retiring early, 47 per cent of retirees found their finances had taken a hit, with 24 per cent of those who return to work doing so because they experienced financial issues.

Women were especially likely to feel the negative financial impact of retiring early, with 50 per cent feeling a financial strain compared to 44 per cent of men, although only 22 per cent of savers across both genders felt they benefitted financially from their decision to retire early.

Despite recent concerns over a lack of understanding of DB pensions, Aviva's survey found that almost one in three (32 per cent) savers identified having a DB pension as being the main measure in enabling them to retire early.

Considering this, Aviva warned that the concept of early retirement may get harder for younger generations to achieve, with the majority of the private sector workforce now saving into defined contribution pension schemes.

However, the insurer stressed that there were steps younger savers can take, with 30 per cent of respondents identifying paying off their mortgage as a key stepping stone to retiring early, while 29 per cent attributed this to saving little and often.

Aviva head of savings & retirement, Alistair McQueen, commented: “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.

“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.”

Adding to this, B&CE, provider of The People's Pension, director of policy and external affairs, Phil Brown, warned that many are underestimating how long their pension pots will need to last them.

“While it’s clear that millions of hardworking people aspire to retire early, unique longitudinal research we commissioned shows that many older pension savers are sleepwalking into retirement and need more support making crucial decisions about how to spend their savings," he continued.

"We are glad that Parliament’s Work and Pensions Committee examined this very important issue earlier this year and the industry eagerly awaits its findings.”

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