Retiring early has never been my dream. I wouldn’t know what to do with myself. 

Yes, I love to play golf, and count myself lucky to be a member of two of the finest golf clubs in the south east of England. But I can’t play every day and even if I could, I doubt I would want to. 

You see, I love work too. I just don’t ever see myself stopping, but I might reach a point where I cut back my hours. Whether I do that early is moot. I’m already north of 55 and the national retirement age in the UK for men is 65. So, I have reached and passed that “10 year” point already.

I recognise that I am not atypical. I accept that many of you would love to retire early, and for many of you retiring early likely equates to stopping work altogether.

But both definitions – stopping or cutting back – kind of work and maybe when I reach that decision to cut back I would have also “retired” – at least if retiring also amounts to cutting back and being financial dependent that I can make the decision to say, “no I’m not working that hard anymore, or I don’t want to do that particular job anymore”.

I have met a few individuals who have reached the promised land and retired early. 

While manipulating income has assisted them all in one way or another, the common factor that links them is that each of them has managed to become financially independent. 

There are two sides to financial independence. Manipulating income is one side, the other is controlling expenditure.

Oh, and by the way, financially independence doesn’t by necessity mean being rich since none of them are rich. 

They have just reached a position in life whereby their expected income and savings over the rest of their natural life can reasonably be expected to exceed their planned outgoings over the same period.That’s my definition of financial independence. I have no objection if yours is being “rich.”

To retire 10 years in advance you must have a plan, and to create a plan, you will almost certainly need the assistance of a Wealth Management Specialist like Firstline Securities Limited.

In creating a plan, the first step is to assess what your likely income will be when you plan to retire (the other side is assessing what your likely expenses will be). 

Your income is likely to come from several sources and may include some of the following:

Most of us can look forward to a pension when we retire. 

Your pension may be a private pension or a state pension. If you have a private pension, try to assess what it will pay you when you plan to retire. Is it a Defined Benefit Pension or a Defined Contribution Pension?

In simple terms, under a Defined Benefit Pension the amount you are paid when you retire is based upon how many years you’ve worked and the salary that you have earned.

Under a Defined Contribution Pension your pension is built up using your contributions (and possible those of your employer if you have one), plus investment returns on whatever the pension plan has invested in, together with any associated tax reliefs.

One question to ask your Wealth Management Specialist(or you can ask us!) is whether your pension can be increased by making lump sum payments into the scheme now?

Savings and investments are something that you build up over time. 

Discuss with your trusted Wealth Management Specialist whether your savings and investments are working for you. It may be possible to transfer your savings and investments into your pension in advance of retirement and doing so may grant you some tax relief.

Consider whether your current residential home can be used to generate capital or additional income when you plan to retire. If you have children, and by the time you plan to retire, they will have all fled the nest, then assess whether you can downsize to a smaller home to generate capital or equity from your home, or, if you want to keep your existing home, whether you could rent part of that home now or in the future, to generate income.

If you have more than one property, then chances are that you will end up being a landlord. So long as your tenants pay on time this can create a consistent source of income in retirement which comes with the added advantage of capital growth if the value of the property rises over time – as most do. 

But this income comes with a hidden non-financial cost since you will need to set aside time to deal with issues that your tenants report, for example, organising repairs and general maintenance to the property.

I don’t believe retirement equates to not working. For me, it equates to working less and perhaps, at the end of the day, doing something different.

Can you continue to work part-time or do something else when you “retire” to generate income? Perhaps you want to start your own business? Retirement is as good a time as any to do that.