Fisherman wades waste-deep in river in foreground of an arched bridge

Knowing when to retire

Do you have enough income to retire? Are you prepared for the life changes retirement will bring? Is this the right time to sell your business? Is your timing right or will your savings and investments be at risk to volatile market conditions?

In retirement, as in comedy, timing is everything. Financially and emotionally, choosing the right moment to retire can make all the difference to enjoying your golden years. For some, retiring is simply moving away from the pressure of a full-time career and having the financial freedom to choose when and how much to work, perhaps even in a self-employed capacity. For others it’s time to put their feet up on a sun lounger in the Caribbean or discover themselves whilst trekking across Buddhist Bhutan. Whatever retirement means to you and whenever you plan to retire, we can help bring financial clarity to the lifestyle changes you want to make and the ambitions you have for your future.

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Newly harvested field full of hay bales in regional England

The older generation refuses to shuffle quietly into retirement, but is playing an increasingly active and enthusiastic role in this Third Age Economy. Around 1.4 million people now continue to work beyond 65 - often in “higher status jobs”.

The Office for National Statistics (ONS), August 2018

Are you ready for retirement?

Is retirement an outdated concept?

Is now a good time to retire?

How do I retire early?

Is retirement an outdated concept?

Retirement is becoming far more fluid as it evolves to mean different things to different people. The traditional idea of an artificial finish line to our working lives is no longer the default. Instead, the Japanese philosophy of Ikigai is influencing our view of retirement in the UK. It translates as “the reason I get out of bed in the morning” and it is inspiring those who are looking for more than just financial security in life. Nowadays, our post-work lives can last as long as our working lives. Yet psychologists tell us that everyone needs some kind of purpose in life otherwise it can be difficult to cope with the loss of status, and lack of mental stimulation that arise from a cliff-edge retirement. In fact, more than a quarter of us would prefer to reduce our hours while staying in our current job, while a fifth of us would like to earn a living from our hobby or by starting our own business*. Keeping a foot in the world of work keeps you physically and mentally active, gets you out of the house and provides a useful source of income.

 

* Centre for Ageing Better, June 2018

Is now a good time to retire?

Choosing the right moment to retire can make all the difference to the quality of your post-working life. In the current economic climate – characterised by global trade wars, Brexit impact and stock market volatility – making the decision to retire might feel risky. Those who are lucky enough to retire at the top of a bull market are more likely to have sufficient funds to help them weather any future downturns. But, if you retire during a period of much more economic uncertainty, a resulting initial loss of income can greatly increase your chances of running out of money. For this reason, it is a good idea to regularly review your overall investment strategy. It is also important to recognise that retirement is a long-term decision and not one that should be unnecessarily influenced by short-term investment challenges.

 

If however your likely strategy is to convert capital into income through, for example, an annuity, then it could make sense to reduce risk (i.e. equity exposure) in your portfolio in the run-up to retirement.

How do I retire early?

Early retirement might be all the rage these days, but the obvious obstacle to retiring early is whether you have enough money to keep you going for 30, 40 or even 50 years. Life’s not cheap and the earlier you retire the less time your savings will have enjoyed the magic of compounding, a topic we’ve touched on here. But followers of the FIRE – Financial Independence, Retire Early – movement say it’s possible to amass enough cash to quit work and follow your dreams decades before your peers, by being frugal, making smart investments and extreme levels of saving. But, if the idea of living a frugal lifestyle isn’t your cup of tea, then to retire early you’ll need expert advice to ensure your savings and investments are working as hard as possible for you. At Investec, our role is to help you navigate life’s journey, to achieve financial freedom faster, unlock more opportunities and bring you the peace of mind of knowing where your money can take you.

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If you’d like to have an informal, no obligation, conversation or have any questions about Retirement Planning, please get in touch.

Middle-aged couple paint pottery together

Thanks to the early retirement strategy they tailored for me, I was able to retire at 59, a full four years ahead of my initial target of 63.

Andrew & Jane B, Leeds

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Retirement shouldn't be taxing

When you’ve worked for years to build your pension and savings, and finally have retirement in your sights, the last thing you want to do is pay more tax than you need to.

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