12 AUG 2025

The benefits (and negatives) of retiring early

By Nigel Danzelman, Head of Marketing Services & Communications

Many of us on the 9 to 5 treadmill dream of retirement. It’s a glittering reward at the end of all those decades of hard work. 

We think of early retirement as endless days enjoying winter sun, ticking off our bucket lists, sunny days in the garden and more quality time with our families.

But is retiring early all that it’s cracked up to be? Is the reality financial hardship, boredom and a lack of purpose?

How many people do retire early?

While many of us do indeed dream of retiring in our 50s or early 60s, how many of us actually take the plunge? Well, it’s probably not as many as you might think.

According to the UK Government, around 60% of UK citizens are not working when they reach the age of 65. That sounds like a lot, doesn’t it?

Yes, but there is a big caveat - most are not working through choice, they’ve stopped working for health reasons or unemployment. Only around a third (or around 20% of UK individuals aged 50 to 65) have taken the positive decision to retire early. 

And the other kicker is that many people are now working into their lates 60s and early 70s – long after they reach their statutory pension age.

In fact, the average age of retirement in the UK has been steadily increasing since the mid 1990s. Women typically retire aged 64.3, while for men it is a bit higher at 65.4 years. 

And according to research conducted by Flagstone, only 26% of Britons think they’ll retire before 65.

So it would seem, in the UK at least, that less of us are retiring early, perhaps a result of the prevailing economic climate and the increase in age for when the state pension kicks in.

Early retirement = increased happiness. Doesn’t it?

A 2021 study by Aviva states that 68% of people report an increase in overall happiness when they retire early.

The same research from Aviva found 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships. 

But retirement doesn’t bring happiness for all. Many people who retire (at any age) without a plan for how to spend their time get bored to death. Literally. They derived their self-worth and most of their social interaction from work and never developed other interests. In retirement, they get depressed.

So whenever you retire, it’s important to have plans, challenges and social interactions in place to provide a sense of purpose. It’s a time to be brave and step outside your comfort zone. To try new things you’ve never had the time to do. 

As Harry Emerson Fosdick said: “Don’t simply retire from something; have something to retire to”.

My health will improve, right?

The main benefit cited for early retirement is an improvement in health. Most people in their 50s and 60s are still enjoying relatively good health, so it’s an ideal period to throw themselves into an active retirement.

Working for a living, even in the most interesting of jobs, can take a toll on your mind and body. It is particularly true if you have a demanding and pressurised job. 

Many people reach burn-out by their 50s. Early retirement allows individuals to escape the cycle of burnout and enjoy a slower pace of life. No early morning alarms. No commutes. No long hours for little appreciation.

And these benefits are quantifiable. 

In the Aviva research cited above, more than half say that early retirement delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved.

A study by the US National Library of Medicine of over 120,000 Americans found that early retirement lowers mortality risks significantly by 12% for men and 23% for women.

Meanwhile, another study recently published in the Journal of Health and Economics, reported that public sector employees in Holland who took early retirement had a 42% lower five-year mortality rate than those who continued working into their 60s.

These are compelling (and sobering) statistics.

Too many of us wait too long to retire, and when eventually we do we can be held back by mobility or health issues. 

As always, there is a (small) “but”: some studies show cognitive decline when you stop working, partially attributed to reduced mental engagement post-retirement. So if you do decide to retire early, train your brain with new hobbies, puzzles, or volunteering.

The luxury of time

Work impinges so much on our time. Early retirement gives you the freedom to experience those bucket-list adventures you’ve been putting off for years while you have the mobility, energy and stamina to enjoy them to the max.

Whether it’s travel to those destinations you’ve always wanted to visit, committing to that passion project, or simply spending golden time with grand-children and family, the earlier you retire, the more time you’ll have to enjoy these experiences in good health. 

There tends to be a sharp rise in health issues for many people in their late 70s. So the window for an active, healthy retirement may not be as great as we might think.

The elephant in the room - money

Retiring early and enjoying “a life of Saturday’s” is all well and good, but how do you pay for this new lifestyle now there’s no monthly salary coming in? 

The obvious danger is outliving your money. Have you saved enough money to fund your retirement? And of course the earlier you retire, the longer the period of time you’ll need to fund.

According to Aberdeen, 58% of people feel anxious that they have not saved enough money throughout their lifetime. 

Research from IFGL Pensions shows that Financial Advisers claim around 60% of their clients considerably under-estimate the size of the pension pot they will need. 

This is where a good financial adviser can be invaluable. They can help you prepare a financial plan for your retirement and model different scenarios. They can help you understand how much money you have, consider how much you may need, and advise on ways to address any shortfalls. 

So make sure you are fully prepared financially to go into retirement confidently.

Read our other article about the Psychology of Retirement Spending here.

So what have we learned?

There are many great reasons to retire early and the benefits – to your health, your well-being and your quality of life – do stack up favourably. 

Whether we’ll be happy retiring early depends on how well we’ve prepared for it. And this isn’t just financial preparation, although that is of course important. It’s also about being psychologically ready too – having goals, a healthy social life and ambitions to provide you with a strong sense of purpose. 

Make new friends and keep active through hobbies and sports for both mental and physical health. Being creative and learning new skills will help your brain stay healthy and present new challenges and achievements. Always remember you are retiring from work, not from life.

If you can do all this you will have a truly fulfilling and happy retirement, at whatever age you choose to leave the rat-race. Just remember though - the earlier you do it, the more time you’ll have to enjoy it.