- One in four (25%) Brits who aspire to retire early aim to do so at 60
- 60 also the most popular age for early retirement among those who have already retired (17%)
- 68% of people report an increase in overall happiness as a result of retiring early – but there can be a price to pay, with 47% of early retirees finding their finances take a hit
- Paying off your mortgage and saving little and often are key stepping stones to an early retirement
- Nearly one in four (24%) who return to work after retiring early do so because they experience financial issues
Sixty is the most popular age to retire early, according to new research from Aviva which reveals the key steps people have taken to embrace early retirement and examines the costs and benefits of doing so.
One in four (25%) are planning to celebrate their 60th birthday by leaving work behind.
With the state pension age currently standing at 66, the findings show one in six (17%) people who have taken early retirement did so when they were 60, making it the most common age to make an early exit from working life. This is also the most popular target age for people who intend to retire early in the years ahead, with one in four (25%) planning to celebrate their 60th birthday by leaving work behind.
The desire to retire early is primarily driven by “wanting to enjoy more freedom while still being physically fit and well enough to enjoy it”. Nearly one in three people (32%) who have retired early or plan to do so gave this reason for embracing a new lifestyle.
Financial security is the second most common factor prompting people to embrace retirement. More than one in four (26%) early retirees say their decision was a result of “being in a financially stable position” so they can afford not to work.
The influence of money matters is also visible in people’s choice of early retirement age. One in five (20%) people targeting early retirement have set their sights on 55 to make the transition from working life. This is likely to be influenced by their ability to access their pension savings from this age.
Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to them in life (23%), wishing to spend more time with family (20%) or finding they are either “tired and bored” of working (19%) or find it “too taxing and stressful” (19%).
The early retirement payoff and the price you pay
Aviva’s research suggests the impacts of early retirement are wide-ranging and broadly positive in many areas of life. Most notably, more than two in three (68%) people who have retired early say their happiness improved as a result.
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...
In terms of the world around them, 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships.
When it comes to their health and wellbeing, more than half report that early retirement has delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved. .
However, the findings suggest these benefits come at a cost, with nearly half of early retirees finding their finances worsening as a result (47%). Women are the most likely to have felt a negative financial impact from retiring early (50% vs. 44% of men). Across both genders, only 22% feel they have benefitted financially from their decision to retire early.
Stepping stones to an early retirement
Among those people who have retired early, one in three (32%) identify having a defined benefit (final salary) pension among the main measures that enabled them to take retirement into their own hands. This suggests 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, Aviva’s findings suggest that people can still take positive steps to make an early retirement possible. Paying off your mortgage (30%) is identified as the second most common stepping stone to retiring early, while almost three in ten early retirees (29%) say saving little and often was one of their main strategies. Nearly one in five (19%) say they also saved extra whenever they received a payrise or a bonus during their working life.
|Table 1: The main measures enabling people to retire early or think about retiring early|
Having a defined benefit (final salary) pension
Paying off my mortgage
Saving little and often
Saving extra whenever I received a pay rise or bonus
Receiving a redundancy payout
Receiving an inheritance
Among those who take early retirement, the research also reveals there is a small contingent who have returned to work (17%) or envisage themselves doing so in the future (15%).
Over one in four (27%) cite the reason for returning to work is because they “wanted a new sense of purpose”, making this the most frequent driver, followed by “missing the company and social interactions with colleagues” (26%). However, a similar number (24%) of early retirees find themselves heading back to work having experienced financial issues.
Alistair McQueen, Head of Savings & Retirement at Aviva, comments:
“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. Using tools like Aviva’s Mid-Life MOT app can help people feel in control of their destination and plot a realistic course towards retiring early.”
Retirement, Savings and Investments
Notes to editors:
- We are one of the UK’s leading Insurance, Wealth & Retirement businesses and we operate in the UK, Ireland and Canada. We also have international investments in India, China and Singapore.
- We help our 18.7 million customers make the most out of life, plan for the future, and have the confidence that if things go wrong we’ll be there to put it right.
- We have been taking care of people for more than 325 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2022, we paid £23.2 billion in claims and benefits to our customers.
- Aviva is a market leader in sustainability. In 2021, we announced our plan to become Net Zero by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition and action at www.aviva.com/sustainability
- While we are working towards our sustainability ambitions, we acknowledge that we have relationships with businesses and existing assets that may be associated with significant emissions. More information can be found at www.aviva.com/sustainability/climate/
- Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at https://www.aviva.com/about-us/our-people/
- As at 31 December 2022, total Group assets under management at Aviva Group were £352 billion and our estimated Solvency II shareholder capital surplus as at 31 March 2023 was £7.7 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
- For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us
- The Aviva newsroom at www.aviva.com/newsroom includes links to our spokespeople images, podcasts, research reports and our news release archive. Sign up to get the latest news from Aviva by email.
- You can follow us on:
- Twitter: www.twitter.com/avivaplc/
- LinkedIn: www.linkedin.com/company/aviva-plc
- Instagram: www.instagram.com/avivaplc
- For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva