How much do you need to retire at 55?

Retiring at 55 is an appealing prospect. Many people dream of stepping away from work while they’re still active enough to enjoy their newly afforded free time. But while the desire may be common, achieving it is something altogether more complex. Early retirement means giving up years of income and stretching your savings and investments over a longer retirement. For some, this can be done. For others, it may require a more nuanced approach.

So, what does retiring at 55 really take? And how do you know if it’s possible for you?

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How much do you need to retire at 55?

The answer to this depends on not just your retirement savings but also on the lifestyle you want to lead once you’ve stopped working. Recent figures from The Pensions and Lifetime Savings Association looked at average retirement income in a more lifestyle focused manner.  The groups are split into Minimum, Moderate and Comfortable with a single person varying between an income of £13,400 a year for a minimum retirement to £43,900 a year for a comfortable retirement. For a couple these figures varied from £21,600 to £60,600 respectively.

But retiring at 55 has many additional challenges. Unlike those retiring at state pension age, you may need to support yourself entirely from your own savings for at least 12 years or more, depending on when you qualify for the state pension to supplement your savings. The state pension is unlikely to cover all your needs. The full new state pension currently pays around £11,973 a year as of April 2025, provided you’ve paid at least 35 years of qualifying National Insurance contributions. Until then, your private pension, ISAs, savings, or other investments will need to do all the heavy lifting.

Can I afford to retire at 55?

You may already have a decent pension pot and additional investments. You may own your home outright or have other sources of income, such as rental property. But even with a solid base, it’s vital to understand whether your money will last.

One of the common challenges early retirees face is the temptation to draw too much too soon. The earlier you access your pension, the longer it needs to last – and the more vulnerable it becomes to poor investment performance or inflation. If you withdraw too aggressively during a market downturn, you risk depleting your pot much faster than expected. This is known as sequencing risk and you can read more about it here.

There’s also the issue of timing. From 2028, the minimum age for accessing defined contribution pensions will rise from 55 to 57, unless you have any existing pension age protections in place. If you turn 55 after this point, your earliest retirement date may be later than you expect. And if you were planning to use your pension as your main income source, this could impact your strategy.

It's worth considering whether full retirement is even what you really want. Semi-retirement, perhaps reducing your hours, freelancing or consulting, can give you more flexibility.

Use our retirement calculator

No one has a crystal ball. But what you do have is a range of tools that can help you understand whether your plans are on track. Our retirement calculator is one of the most useful, especially if you’re hoping to retire at 55.

By inputting your current savings, your target retirement age, and the income you’d like to receive, our retirement calculator can provide an estimate of how long your money might last – and what you’d need to contribute to reach your goal.

Retirement Calculator

A useful tool to get a basic understanding of what your future retirement plans look like is our retirement calculator. From your own personal circumstances , you will be able to forecast an estimate of the pension income you will get when you retire and receive a target retirement income to aim for based on your choices.  

It’s important to remember that these tools are only as accurate as the assumptions they’re based on. Investment growth, inflation, life expectancy and future tax rules are all variables. But using a calculator is an excellent way to create a picture of what your retirement might look like – and how close you are to achieving it. This is not guaranteed and is for illustrative purposes only.

How to really look into your financial future

While calculators give you a high-level snapshot, cash flow forecasting takes your planning a step further. It is a more personalised approach that helps model your financial future in detail.

A cash flow forecast looks at all aspects of your income, spending and assets, both now and in retirement. It takes into account your savings, pensions, investments, property, and any planned large expenses, like helping children with a house deposit or taking a round-the-world trip.

What makes it powerful is that it’s dynamic. With the help of your financial planner, you can run scenarios to see how your financial position changes if you retire earlier, downsize your home, delay your state pension, or take lump sums from your pension. You can also test the impact of market downturns, inflation spikes, or a longer-than-expected retirement.

This kind of planning gives you greater confidence in your decisions. Rather than relying on rules of thumb, you can understand exactly what is affordable – and what changes might be needed to get there.

At The Private Office, we believe cash flow forecasting is a key part of any long-term financial strategy. It provides a visual projection of your financial life, highlighting when and where gaps might arise and helping you take action early to avoid them.

Pension drawdown or annuity – which is best for early retirees?

If you’re planning to retire at 55, it’s likely you’ll be managing your pension using drawdown rather than buying an annuity. Drawdown allows you to keep your pension invested while taking income as needed. This offers more flexibility, especially for those who expect their income needs to change over time.

However, it also means more responsibility. You’ll need to keep an eye on investment performance, monitor your spending, and ensure your pot lasts. For some, this can be daunting, and this is where advice becomes so valuable.

Annuities, on the other hand, offer peace of mind through guaranteed income for life in exchange for flexible access to a ‘pot of money’. But if you buy one at 55, the rates are generally much lower than if you wait until your 60s or later. For that reason, many early retirees opt to draw down first, possibly considering an annuity later on when the rates become more attractive or even a combination of the two later in life.

Is early retirement realistic for you?

For some people, retiring at 55 is entirely realistic. For others, it might require adjustments to spending, saving more in the years ahead, or even considering part-time work to bridge the gap.

What’s most important is having a plan. That plan should be based on careful analysis, not guesswork. It should be flexible enough to adjust when life changes. And it should take account of your goals and values, not just the numbers.

Seeking financial advice can play a critical role here. We can help you define your goals, assess your current position and build a strategy that puts you on the right path, whether that means retiring at 55, or simply retiring with confidence, whenever the time is right for you.

We’re currently offering those with £100,000 or more in cash, investments or defined contribution pensions a free cash flow forecast review worth £500. For more information why not get in touch.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning or tax advice. 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.