As we all know, the retirement age is only going one way. In fact, these tables show a frightening reality of what’s happened to the official age over the last few years. Suffice to say, it’s not a pretty sight.
However, just because the “official” age is heading north, it doesn’t mean to say that your desired retirement age is doing the same. Sure, if you are banking on any pension that is government-backed, you might be set for problems. Most people take matters into their own hands though, via either savings, private pensions or investments.
Even if you take the above approaches, there are some world events that can wreak havoc with your plans. Today is all about showing what you need to watch out for if you are planning an early retirement.
You may have pledged a lot of your money in an investment fund over the last few decades. This may have grown at a rate that has beaten the market – and this has left you with a nest egg for retirement. Then, disaster strikes. A recession sends the values of your stocks plummeting and all of that money that you had built up for early retirement, is suddenly out of the window.
Of course, the opposite could also occur. The economy might experience its finest ever years, and this might allow you to retire even earlier.
Regardless, the state of the economy matters. If stocks drop 10%, this could equate to a significant portion of your wealth doing the same. This could mean paying for funerals, elderly care, the kids university fees (more on that later) and whatever else becomes impossible and you have to work longer.
The housing market
Quite often, this is tied into the previous point. After all, if the economy is weak, the housing market tends to follow suit. In some cases, the housing market will not impact your retirement plans. If you have paid off your mortgage, and have no plans to move, the state of the housing market is unlikely to deter your early retirement goals.
However, what if you want to downsize? In a poor housing market, you will sell your home for below its historic market value. Granted, you will also buy lower, but most people don’t want to go down this path. Or, if you need to remortgage and the value of your home has decreased, the bank may pass on a much higher rate of interest. The result? Your monthly repayments increase.
Finally, let’s talk about university fees. In the UK, there has been plenty of controversy over the last decade of them, after they almost tripled following a political decision.
If your children are planning on studying, this can naturally impact you. Can you afford to help them out if they take the plunge? Sure, there are government grants and loans available, but this might be a path that you would rather avoid as well.