A rising number of people are choosing early retirement and stopping work in their 50s.
The number of early retirees rose sharply following the Covid-19 pandemic, with people leaving the workforce due to long-term ill health or caring responsibilities – an issue compounded by longer NHS wait lists.
But not everyone is leaving the workforce for reasons beyond their control. The Bank of England has said many people in their 50s and early 60s are retiring to ‘live the life they would like to live’.
So what does it take to retire early and how should you manage your money in retirement?
Read more: How to retire early: the Fire movement
Gary Tuttle, 58, from East Anglia, retired at the age of 52 after more than 40 years working as a factory operative and manager.
“I’m one of eight children and like many families back in the 1970s, finances were tight for my parents,” Gary says.
“My father worked as a council dustman most of his life and my mother stayed at home looking after the family, which was a common way of living at that time.”
Gary’s parents had a three-bedroom council house and managed on his father’s income alone.
“This upbringing gave me a good understanding of finances, budgeting and money at an early age,” he says.
By the age of 13, Gary had taken on a number of odd jobs to earn money. He’d spend his time strawberry picking, delivering newspapers and working at the local fair in the summer holidays.
![Gary Tuttle [pictured], 58, retired at the age of 52 after more than 40 years working as a factory operative and manager](https://moneylowdown.com/wp-content/uploads/2023/06/Gary-Tuttle-and-wife.jpg)
At the age of 18, he got a job in a factory packing frozen vegetables for a frozen food manufacturer and started saving into his pension.
“Even at this age I knew I wanted to retire early – aged 55 at the latest,” Gary says.
“I had the opportunity to start investing in a pension. First in a stakeholder scheme and then into a final salary (defined benefit) scheme when I became a shift manager after a couple of years.
“For the next 11 years, I continued to pay around 7% of my salary into the final salary scheme. I also made additional voluntary contributions into another workplace scheme. This meant 22% of my salary was going into my pension.”
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‘I became mortgage-free in 2016’
Gary was made redundant in 1998 and moved to another factory for a chilled food manufacturer. There he earned a similar wage as a manager and paid the same amount into his pension.
“By this point, I’d met a partner and bought a house with the help of a mortgage. When interest rates hit rock bottom after the financial crisis of 2008, I concentrated on paying off the mortgage and became mortgage-free in 2016,” he says.
In 2011, Gary’s employer stopped its final salary scheme and introduced a defined contribution scheme. This is where both you and the employer pay in. The amount you get in retirement depends on how much is in the pot. As well as how well your investments have performed.
“My employer contributed 9% and I contributed 6%. So I was getting 15% of my salary paid into a pension at a cost of only 4% to me thanks to tax relief.”
By 2017, Gary was paying 58% of his gross salary into both his company pension and a separate private pension.
“I also had a stocks and shares ISA which held around £85,000 in 2017,” he says.
“I’ve been a basic-rate taxpayer all my life. Although by the end of my career, I was technically a higher-rate taxpayer. But because I paid a decent chunk into my pension, this reduced my net salary and my tax contributions because I was only getting paid around £23,000.”
How do stocks and shares ISAs work?
A stocks & shares ISA is a tax-efficient investment account which means you don’t have to pay income tax or capital gains tax on the money you earn.
Savers can invest in a range of shares, funds and bonds.
Platforms such as Fidelity* and Nutmeg* can be good places to start investing. But remember, your money can fall as well as rise.
‘I hope to have £230,000 in my private pension by 65’
In March 2018 Gary took the plunge and retired aged 52 with a defined contribution pot of £386,000 plus his £85,000 ISA savings. Initially, he funded his retirement by withdrawing money from his ISA until he could access his private pension aged 55.
“The plan was this would last me until aged 65. Then I would receive an income of £18,000 a year through my defined benefit schemes followed by a further £10,000 when I begin receiving the state pension aged 67,” he says.
Gary, who is now five years into retirement, withdraws £18,480 a year from his pension.
“Most of these withdrawals are tax-free because of the personal allowance and the fact that 25% of pension withdrawals are tax-free. I also top this up with £5,000 a year from my ISA, which is also free of tax.”
Gary’s wife, who worked part-time at a supermarket, is also retired. In total, they share an income of £33,000 with almost no tax to pay.
“On that income, we have managed to fit in eight foreign holidays since the end of 2021. And we love visiting Gran Canaria at least twice a year.”
Read more: Best ready-made personal pensions
Gary has four adult children aged 26 to 39 and four grandsons with a granddaughter on the way in November.
“We spend a lot of time helping wherever we can. We love being around to watch them grow,” he explains.
“I hope to have around £230,000 in my private pension by the time I’m 65. That’s when I can receive my final salary pensions.
The plan is to stop touching the private pension so it can be passed on to the children as part of their inheritance, along with the family home.”
Gary says being frugal and saving hard throughout his working life has allowed him to live the retirement he always dreamed of.
“I want to encourage as many people as possible to dream of the day they can reach their goal of financial independence without having to worry about day-to-day work.
“You don’t need to earn huge amounts of money. But early retirement does take planning and always spending within your means.”
Read more: What is pension drawdown and how does it work?
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