How much will it cost you to retire early?

The pre-state pension gap is the amount of money you need to retire earlier than the state pension age of 68 - but the cost of retiring early can run into tens of thousands.

For example, someone who wishes to retire at 60, assuming their state pension age is 68 and they're retiring as a couple, would need to have saved enough to generate an income of £136,000 to support them during this eight-year gap, on top of what they need for the rest of their retirement, according to a study by PensionBee.

When considering the average life expectancy for women (88) and men (85), a woman retiring at 60 in a couple would need a combined retirement income with her partner of £476,000 for her 28 years of expected retirement, to live a moderate lifestyle. Assuming she would receive the full State Pension from 68, £212,000 of this total would come from her State Pension payments and the remaining £264,000 would need to be generated by the couple’s workplace or personal pensions and other savings.

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Age 60 is considered the ‘ideal’ retirement age while the UK healthy life expectancy age (the number of years you can expect to live in good health) is 63.

But four in 10 British adults (40%), equivalent to around 13m people, think they will not be able to retire before the state pension entitlement age. This rises to 48% if the state pension age rises to 68.

PensionBee, an online pension provider, has launched a state pension age calculator to help savers evaluate if they can retire before they’re eligible to receive the state pension.

MoneyHelper also has a pension calculator that allows you to input your personal details and age preference for retirement to explain what estimated income and shortfalls or surplus you can expect.

Becky O’Connor, director of public affairs at PensionBee, says: “The dream of retiring early is alive. For many people, it is in fact necessary to give up work before they reach state pension age, due to caring responsibilities, or illness. As the state pension age rises, more and more people will find they either want or need to retire before they reach it. So identifying how much extra pension would be required to do so is an important part of retirement planning.”

How to boost your pension savings

• Save thousands of pounds in fees. Check the fees’ on old and current investments and switch to a lower cost provider to make significant savings. You could save £259 a year (or £12,000 over a working life) this way, according to investment platform Interactive Investor.
• Check you’ll receive a full state pension. You need 35 years' worth of National Insurance credits (NICs) to get a full state pension. If there were years where you didn't get enough NI credits - for example, if you were unemployed but not claiming benefits or living abroad - you may find there’s a gap or two on your record. It’s possible to get free NI credits to fill these gaps under certain circumstances and the government has extended the deadline for buying National Insurance credits to boost your state pension back to 2006. In other cases you can fill gaps by paying voluntary NI contributions.
• Track down lost pensions. More than 2.7m pension schemes worth £26.6bn are unclaimed or “lost”. Use the government’s free Pension Tracing Service to track down a forgotten scheme.