As the State Pension age rises, many of us could reach our dream retirement age before we’re eligible. But that doesn’t mean you have to wait until your late 60s to stop working. With the right savings strategy and retirement income plan, you can retire on your own terms.
While the current State Pension age is 66, the government plan to increase it to:
- 67 between 2026 and 2028; and
- 68 between 2044 and 2046.
A new pensions consultation is underway that could mean it continues to rise faster and higher. So if you do want to retire before you’re eligible to claim the State Pension, how do you fund those years?
Bridging the gap
For many people, the State Pension is an essential element of retirement planning. It currently pays up to £11,973 a year (2025/26) which makes up a large chunk of the suggested amount needed to achieve a minimum standard of living in retirement. According to Pensions UK and their Retirement Living Standards, for a single person, that’s £13,608.
The savings you’ll need to cover the income shortfall before you can claim the State Pension depends on how many years earlier you want to stop working. For example:
- to retire two years early, you’ll need £24,000;
- to retire five years early, you’ll need 60,000; and
- to retire 10 years early, you’ll need £120,000.
Check your State Pension age with PensionBee’s State Pension Age Calculator. It’ll tell you what date you’ll reach your retirement, plus you can calculate your Pre-State Pension Gap by adding:
- your gender;
- your current pension pot size;
- your ideal retirement age; and
- your yearly contributions.
How much can you afford to withdraw from your pension?
If you have a six-figure pension it can be easy to assume you can afford to stop working a few years before you hit your desired age. But remember that pot needs to last you throughout your retirement.
Most financial experts use the 4% withdrawal rule when it comes to taking pension money. That means you should be able to withdraw up to 4% of your pot each year for around 30 years.pens
So, how big would your pension pot need to be to sustainably withdraw enough to retire early?
| Pot | Sustainable annual income (4%) | Will it cover the £11,973 State Pension gap? |
|---|---|---|
| £100,000 | £4,000 | No |
| £200,000 | £8,000 | No |
| £300,000 | £12,000 | Yes |
| £500,000 | £20,000 | Yes |
The calculations above illustrate 4% of each pot figure and don’t take into account fees. More on the 4% withdrawal rule.
You’d need a pot worth at least £300,000 to be able to sustainably cover the State Pension gap. You can use PensionBee’s Drawdown Calculator to see how withdrawals could impact your own pot.
What do you need to save to retire before the State Pension age?
The idea of a £300,000 pension pot might seem impossible, but it’s doable. And depending on your current age and how much you already have saved, you may have to put away less than you think. Here’s a breakdown.
| Age | Monthly payments to achieve £300,000 pension pot |
|---|---|
| 20 | £315 |
| 25 | £365 |
| 30 | £430 |
| 35 | £520 |
| 40 | £650 |
| 45 | £830 |
| 50 | £1,150 |
| 55 | £1,700 |
The figures above have been calculated using PensionBee’s Pension Calculator, and are inclusive of tax relief and potential employer contributions and assume:
- you have no pension savings;
- you aim to retire at age 66
- assumes investment growth of 5% a year;
- inflation at 2.5%; and
- management fees of 0.70% a year.
Want to see how your current savings are tracking? You can use PensionBee’s Pension Calculator to see how much you might need to bridge your own gap. Plus, you can see how adjusting your contributions could help you achieve your goal sooner.
How can I boost my pension savings?
If the figures seem daunting, remember there are ways to boost your pension savings. Here’s how.
Most UK taxpayers will get tax relief
The benefit of tax relief means you’ll get a top up from the government on your pension contributions up to a certain amount. Usually basic rate taxpayers get 25% - this means HMRC adds £25 for every £100 you pay into your pension making it £125. Higher and additional taxpayers might be able to claim more - head to GOV.UK for more info. And if you’re wondering how much you would need to contribute before tax relief to achieve your pension saving goals, use PensionBee’s our Pension Tax Relief Calculator.
Make the most of employer contributions
If you’re enrolled in a workplace pension, your employer will be making contributions on your behalf too. Under Auto-Enrolment rules, you (the employee) are required to contribute 5% while your employer must pay at least 3% of your qualifying earnings (the earnings you make between £6,240 and £50,270). While this is the minimum, some employers might be more generous. If you can afford to increase the percentage of your contribution, it’s worth asking if they’re willing to match it.
If you earn less than £10,000, but above £6,240, your employer doesn’t have to automatically enrol you in their scheme. However, if you ask to join, your employer will be unable to refuse you and must make contributions on your behalf.
Consolidate any old pensions
If you’ve had several jobs, you may’ve lost track of one or two pension pots. Tracking down any pensions you had with previous employers can make managing your retirement savings much simpler - and you may even save on fees you could be paying across multiple providers. It’s thought there’s over £50 billion in pension savings at risk of being lost, so make sure you aren’t missing any old pots. And if you need a hand tracking them down, read this blog from PensionBee.
Retiring before the State Pension age is entirely possible with some planning. However there’s no one-size-fits-all solution. Retirement planning is very individual and will depend on your circumstances, current age and other factors. Use tools like PensionBee’s Pension Calculator to check your progress and think practically about the ways you can boost your pension savings.
Ruth Jackson-Kirby is a Financial Journalist passionate about making money matters clear and accessible. She’s written for The Mail on Sunday, MoneyWeek, The Sun, and Good Housekeeping, helping readers navigate pensions and personal finance with confidence. She believes everyone deserves financial security and is on a mission to cut through jargon and make finance relatable.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
