When is the 'right time' to retire?

Sun Life recently carried out a survey of 1,000 people of whom 29% were retired, 23% working full time, 11% working part-time/semi-retired, 8% unemployed and 3% self-employed.  

The findings show that the average age for retirement is 59 but those still working are aiming to retire at an average age of 64 suggesting many people over 50 want to continue working for longer.   Of those who had already given up work, 18% - which is almost one in five people - thought they retired too soon and only 6% thought they had retired too late.  

Another survey carried out by financial research company, Fidelity Investments, asked 2,000 adults in the UK (aged 25-75) about their retirement planning and expectations.  The results show that the average age people expect to stop working is 59 but not everyone plans to retire at a fixed point in time.  86% said they would retire when they felt old or not needed at work and 69% said they wanted to leave work before getting too old.  Whilst 71% of women planned on retiring at 60 or before, the figure was only 58% of men. 

The results of surveys such as these indicate that:

1. You need to consider what is the right time for you personally to retire – one in five people retired early and regretted it.

2. There was no single common reason for wanting to retire early but rather each individual made the decision based on multiple factors.

Of those wanting to retire early:

• 36% wanted to spend more time with family
• 24% wanted to pursue hobbies or interests
• 18% wanted to retire because they disliked their work

Of those who said they wanted to continue to work after state pension age:

• 41% said they would have to do so out of financial necessity
• 39% said they enjoyed their jobs
• 37% said they wanted to have something to occupy them during their ‘retirement’ years
• 17% said they wanted to continue to work to socialise with colleagues

Whether you can you afford to retire depends entirely on you and your circumstances.  

You need to think about basic living costs – if you have a mortgage, what service charges you pay, the rising cost of utilities, the cost of your car, home maintenance and repairs, long term health care and the costs of travel or hobbies. Financial experts generally suggest that you need 70% of your pre-retirement income to live comfortably.

In February 2021, Which? Carried out a survey to find out how much people spend in retirement.  The responses showed the amounts varied depending on lifestyle and whether they were living alone or with a partner.

Retired single people spent:

• £13,000 a year for an essential lifestyle.
• £19,000 a year for a comfortable lifestyle.
• £31,000 a year for a luxury lifestyle.

Retired couples spent:

• £18,000 a year for an essential lifestyle.
• £26,000 a year for a comfortable lifestyle.
• £41,000 a year for a luxury lifestyle.

Essential lifestyle spending just covered the basics: food, clothes, and housing. Comfortable lifestyle spending featured a few luxuries: European holidays, hobbies, and eating out. While luxury lifestyle spending also included things like long-haul holidays and a new car every five years. The results suggest retirement can be more affordable when costs are shared with a partner (on average 32% less per person).

If you have savings and a good company pension, it could well be a good time to retire.   The following, however, are all considerations you may wish to take into account.

To release equity and make savings on your living expenses, consider downsizing your property or moving to a new home that requires less maintenance and could substantially reduce your energy bills. If you’re paying for a property that is too large for your needs, with high bills and high council tax rates, you could sell to help fund your retirement.

If you want to make savings, perhaps downsizing to release equity and moving to a new property that requires less maintenance and may substantially reduce your energy bills may help with your retirement fund. 

You will need to understand your own pension arrangements and a good starting point is to check how much your State Pension is worth and when it will be payable and this can be done on www.gov.uk/check-state-pension.  Then take the time to look at any other private and employment pensions you have.  Typically, the minimum age for taking a pension is 55.  

If you have any investments such as stocks and shares or any property, this could help fund your retirement.

You might consider taking some low-key work – part-time consultancy or working in retail to boost your income.  You can claim your state pension and keep working but you need to bear in mind that your state pension is taxable so when added to your earnings it may put you into a higher tax band – although when you reach state pension age, you won’t have to pay National Insurance contributions even if you keep on working.

1. You believe your best years are behind you. This could certainly be the case if you have achieved all your career goals and have reached a high level in your department or your company and there’s ‘nowhere else to go.’  If you don’t feel you can achieve more, then it could be time to retire.
2. It feels like you’re not making a difference. It could be that you feel you’re being asked to do more work with less support and fewer resources.  A sense of accomplishment is a strong motivator and if you feel you aren’t making a difference or aren’t able to make a difference, it could be a good reason to retire.
3. You feel stressed and anxious and are increasingly unproductive and distracted at work. You may be taking work problems home with you and not sleeping well because you’re worried about situations in the workplace.
4. It feels like every day drags and you can’t wait for the weekend. You may be dreaming about retirement or your next holiday and it may require all your willpower to get out of bed and go to work in the morning.
5. You’re reluctant to learn new job skills, tackle problems or learn about new technology. If this is the case you could be suffering from ‘burn out’ or are simply no longer interested in or passionate about your work.
6. You are envious of your retired friends. You may be resentful of work, feeling that it is getting in the way of doing the things you enjoy – sport, cooking, learning new languages, and spending time with the family, particularly the grandchildren. 
7. You feel out of place or irrelevant at work. This is often the result of a new, younger team being put in place.  Your long-term colleagues may have retired themselves to be replaced by individuals who are more dynamic, have new ways of working, and are more up-to-date with technology and new methods.
8. Your list of retirement pros far outweighs the cons. Write down the pros and cons of retiring – you may be worried about the financial aspects or what you’re going to do to fill the time when you retire – but on the upside, you’ll be able to do so much that you’ve never had time for before, it could be time to retire.  Below are a few of the pros and cons you might consider – and only you know how important these are to you, personally.

What are the positives of taking retirement? 

• You’ll have a more relaxed lifestyle
• You’ll be able to do things you never had time to do – travel, buy a second home, play a sport or take up a new hobby
• You’ll be able to spend time with your family and friends. If you have grandchildren or other young family members, you’ll be able to play more of a part in their lives
• You’ll be able to move home if you wish – to somewhere easier to manage and less expensive to run because you’ll no longer be tied to a workplace or have to live within easy reach of the office

What are the negatives of taking retirement? 

• Being at work keeps your mind active and alert
• Workplaces tend to be social places
• You may be less well off financially
• You have a vast amount of experience and it's satisfying to be able to put it to good use – and feel useful.
• Work brings structure and purpose into your life

• Physical exhaustion. If you don’t have the energy to tackle the jobs at work that you used to cope with without a problem, it’s could be time to retire. Only you will know if your physically demanding job is becoming more difficult to do.
• Development of - or worsening of - health conditions. Whether you’re suffering from raised blood pressure, spinal or joint problems, work – and particularly manual work can affect your physical health.
• Feeling your age. As we age our bodies undergo significant changes – muscle strength tends to decrease, ligaments can become less elastic, joints can become arthritic.  All these age-related issues can affect your work and particularly manual work.

To conclude, how do you know it's time to retire? 

Taking into account, all the physical, emotional and financial aspects of retirement, before asking ‘when is it time to retire?’ it would be wise to ask yourself the following questions and if ‘yes’ is the answer to more than a couple of them, it could well be the time for you to retire.

Physical signs it's time to retire:

• Is my physically demanding job becoming more difficult to cope with and is it affecting any existing health conditions?
• Am I feeling my age?
• Do I want to retire now and spend time enjoying my favourite sports whilst I am still physically fit?

Emotional signs it's time to retire: 

• Is my work is getting more stressful and emotionally draining?
• Am I feeling trapped at work and resentful of having to go to work?
• Am I envious of my retired friends?
• Is spending more time with friends and family becoming more of a priority?
• Would I like to move home, away from work and nearer family?
• Am I yearning to learn a new hobby or to spend more time doing something I really enjoy?
• Am I sure that I wouldn’t miss the social aspect of work?

Financial signs it's time to retire:

• How far am I off pension age and what will be my state pension and my company pension?
• Will I be able to manage to maintain a comfortable lifestyle, financially?
• What other sources of income do I have – stocks and shares, property?
• Would I consider downsizing to a more energy-efficient home that is less expensive to run?
• Could I do low-key, part-time work?