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How to retire early

Almost everybody would like to know the secret of how to retire early, but the age at which you finally give up work and become your own boss is dependent on several factors such as the amount of money which you have already saved, and whether you have enough money to sustain you through the rest of your life. This issue is not as straightforward as it seems, as the average person is living much longer and the cost of living continues to rise.

Money in hand

Disposable cash
An important consideration for anybody planning to retire early - in other words before they can claim a state pension at 65 or 66 - is how much disposable cash or money in hand they have available. In many cases, knowing when to retire is difficult from this point of view. For instance, if you plan to take a holiday upon retiring, you will use up part of your disposable cash, which means that you will have to rely on other assets to sustain you. ISAs and other savings
People planning for their early retirement usually place their eggs in more than one basket. This means that they allow some of their cash savings to grow in individual savings accounts (ISAs), normal bank saving accounts or lottery bonds such as the state-supported NS&I premium bonds. The more a person spreads their risk, the better their chance of avoiding disappointment if their investment is negatively affected.

Fixed and other assets

Pension funds
If a person has been saving into a pension fund for many years, they will hope that this will pay out at the point they retire. However, it is crucial for savers to remember that most pensions only pay out at a certain age, and even then these will be carefully controlled amounts that reflect the gains or losses that the fund has made over the years. If you are retiring early, ensure that you have not taken an immediate pay out for granted. An early retirement calculator may guide you in answering the question of whether you can retire early, but this gadget should be consulted with the help of a pension adviser. Property
Owning a property has always been seen as a safe refuge for those wishing to retire early in the UK, but it is no longer the sure bet that it was before the recession. The crash in property prices means that those wanting to retire early need to have their property carefully evaluated before selling, and that they must be sure that they can sell it within a reasonable time if they wish to downgrade in order to fund an early retirement.

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