Firstly, that’s a great question. The simple answer is that you can retire when you have adequate wealth to do so. This can be a mixture of pensions, savings, investments, and property.
This may sound obvious; however, many of us think that we have to retire at a date set by our pension provider, or indeed the government via your State Pension age.
Let’s take a closer look
It is important to understand that there is no longer a ‘retirement age’ (for example at age 65). Nowadays, employers have to be able to demonstrate a good reason why they would force you into retirement; such as, the job requires certain physical abilities or the retirement age is written into the pension scheme rules. If your employer asks you about your retirement plans, you do not have to provide an answer, as it is entirely your decision.
The retirement age, or the date that you declared on commencement of your pension plan is not fixed. Pension providers ask for this information in order to provide you with a reminder, nearer the time; however, you are not obliged to honour the original retirement age, and you have the right to defer the pension benefits until a later date, if it is in your best interests to do so.
The minimum age to take pension benefits is normally age 55 (although this is increasing, please see our article produced in December 2020). That said, there are some exceptions, where benefits can be paid before the normal minimum pension age. For example, if you are in ill health. New rules came in a while ago, which provides you with more flexibility, freedom, and choice, about how to take the benefits from your pension(s).
It is equally as important to also establish when your State Pension age is. It is useful exercise to apply for a State Pension forecast, before you start to consider your retirement planning. You can do this by visiting: gov.uk/statepension.
It is also worth noting that you can, in most cases, continue to work and draw pension benefits. This may work for you, if you want to reduce your working hours, or switch to a part-time position. It may also be possible to continue to be a member of your workplace pension, and continue to benefit from tax-relief, and employer contributions.
There is a lot to consider when planning your retirement, and this article only provides some of the context. Working out your budgetary requirements, and understanding the various pension income options can be overwhelming, especially if you have a multitude of pensions from various employment, with different providers. These are life changing decisions, and one that should be considered carefully, and discussed with an independent financial adviser, who can assist you in navigating your retirement journey.