How can I retire at 55? Your Guide to Early Financial Freedom
Imagine waking up at 55 to a world full of possibilities. No morning alarm clock, no more commuting, just the freedom to pursue your passions on your own terms. This is the retirement reality that could be achievable through smart financial planning. Many of us would love to retire early and enjoy more financial freedom in our later years, but the question is: How much do you need to retire at 55? How much should you save for retirement? What is the average UK pension pot at 55? and how much income will you receive? This article will show you how it may be possible to retire at 55 in the UK, with practical advice to help you achieve your goal.
Retiring at 55: Is it right for you?
The idea of early retirement is something that appeals to many, but it requires careful consideration of your financial, personal, and lifestyle goals. The first step is to assess your current financial situation and future needs. How much do you have saved? Do you have a clear understanding of your long-term financial obligations, such as mortgages, children’s education, or other significant expenses that you may need to continue funding beyond receiving a regular income. These are critical questions that need answers before committing to an early retirement plan.
Another aspect to consider is your personal readiness. Retirement can drastically change your daily routine and personal identity. Many people derive a sense of purpose and fulfilment from their careers, and stepping away from this so early can be challenging. It’s important to think about how you will spend your time and how much you will need to enjoy the activities or hobbies that will fill the gap left by your career.
Lastly, contemplate the potential long-term implications of retiring early. Life expectancy at birth in the UK is 78.8 years for males and 82.8 years for females between 2021 to 2023, according to the Office for National Statistics – Data and analysis from Census 2021. This means your retirement savings need to last longer, possibly 30 years or more.
What is a good pension at age 55?
The average pension pot for individuals aged 55-64 in the UK is estimated at £89,349 [2] across both workplace and individual pension plans, but this figure is nowhere near substantial enough for you to enjoy a comfortable retirement at 55 without having additional income.
A good pension pot is one that supports the lifestyle you want and provides sufficient income to support you during retirement. Many people may be shocked to learn how little income their savings will provide. A good rule of thumb is to have a pension pot worth about ten times your annual salary by the time you retire. This is why it’s important to start saving sooner and have a clear financial plan that will help you get where you want to be sooner.
To give you an idea of how much you need to live off, the Pension Lifetime Savings Association’s latest figures [1], released in February 2024, shows the cost of a Minimum Retirement Living Standard increased from £12,800 in 2023 to £14,400 in 2024 for a single person. They would need £31,300 a year for moderate lifestyle, and £43,100 a year for a comfortable lifestyle, which includes a two week holiday in Europe and several UK mini breaks. For couples, the price tag of these three lifestyles is £22,400, £43,100 and £59,000 per annum.
The table below details what we would define as ‘comfortable’, ‘moderate’ and ‘minimum’.
While these averages are a helpful starting point, they won’t necessarily reflect your specific needs. How much you will need in retirement will be specific to you, and it’s crucial to work with a financial adviser to calculate what your personal retirement expenditure might look like.
How much do I need to save to retire at 55?
Starting your savings journey early gives your money more time to grow through “compound investing.” It’s actually pretty simple: the returns your money earns start earning their own returns. Like a snowball rolling downhill, your money picks up momentum over time. When you invest regularly, this compounding effect works its magic year after year. Before you know it, those consistent contributions, even modest ones, can grow throughout your lifetime, so that by the time you’re 55, you should have a good sum to draw from, providing of course, you have invested regular monthly contributions into a pension as early as possible.
Based on £200 invested each month, increasing by 2.5% a year: return 5% a year, compounded monthly, after charges. These figures are examples only and are not guaranteed. They are not minimum or maximum amounts. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.
Can I withdraw from my pension age 55?
You can usually access your private pension from age 55 (rising to 57 in 2028). Final salary pensions might not kick in until age 65 or beyond. This makes it crucial to plan for any gaps.
If you retire at 55, you won’t be able to withdraw any money from your State Pension until you reach 66, this is rising to 67 and then finally to 68 by 2028.
How can we help you retire at 55?
If being able to retire at 55 is something that you aspire to, working with us sooner rather than later could help you achieve your goal with confidence and financial security. We’ll create a detailed cashflow model based on where you are now, your income, pension savings and investments, as well as what outgoings and cash you’ll need between now and when you retire at 55.
Planning your longer-term finances now will help you feel confident and in control of some of the best years of your life. We’ll regularly review your progress along the way, make adjustments as needed, and help you stay focused on your long-term objectives.
Take our Retirement Readiness Quiz to start your retirement planning journey today.
Book a consultation with one of our financial advisers today to find out more.
[1] Retirement Living Standards, Pensions and Lifetime Savings Association, 2024. All figures quoted were developed by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA.
[2] Opinium, on behalf of St. James's Place, surveyed 6,000 UK adults nationwide in two polls between 23rd December 2024 and 17th February 2025. As part of investigating total pension wealth and confidence in reaching retirement living standards, additional research was conducted amongst a nationally representative sample of 2,060 adults aged 16+ between 26th-28th March 2025. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.
