How to create an early retirement investment strategy

In today’s fast-paced world – in which a healthy work-life balance can be hard to achieve – early retirement is becoming an increasingly popular goal with one study finding that approximately 5.3m workers over the age of 50 are considering retiring early.

The good news is that, with careful planning, an early retirement can be very achievable, especially if you are a high earner. With that in mind, here’s a look at how to create an early retirement investment strategy.

Define your early retirement goals 

When developing an early retirement plan, the first step is always defining your goals. Here, you need to think about when you’d like to retire and what kind of lifestyle you’d like to have after you stop working.

It’s worth pointing out that in the past, retirement typically meant no more work. However, these days, things are not so black and white. In the future, you may still want to work in some way – just not in the way you have been up to now.

Run the calculations for your early retirement 

Once you have some retirement goals in mind, you can start to think about how much money you’ll need to achieve them.

Determining how much money you’ll require is never easy as there are a lot of expenses to consider (mortgage payments, school/university fees, holidays abroad, healthcare, etc.). You also need to think about inflation and tax. But one rule of thumb that can be useful when calculating your retirement income needs is the ’50-70′ rule. This suggests that you should aim for an annual income that is between 50% and 70% of your pre-retirement income. So, for example, if your income today is £250,000, the 50-70 rule suggests that you should aim for £125,000 to £175,000 per year in retirement.

At this stage of the process, it’s worth considering your life expectancy. If you plan to retire at 50 and expect to live to 85, you’ll need enough capital to last 35 years. Bear in mind that in the UK, life expectancy is increasing. Indeed, one recent study concluded that by 2030, living to 90 could become the norm in affluent areas of the country.

Develop an early retirement strategy

So, you’ve defined your goals and have some retirement income numbers in mind. The next step is to develop a framework designed to generate the level of passive income you’ll require when you stop working.

Being well financially organised here is key. Understanding how to save (tax efficiencies), where to save (pension, ISA, Offshore Bonds, VCTs and various other), how much to save and what investments to hold in your various pots is crucial. Through proper financial planning, cash flow modelling, and professional advice, you will be able to determine all of the above to potentially bring that retirement date forward by years.

Without an early retirement investment strategy, you could be adding years to the time you would need to work in order to achieve your desired lifestyle in retirement.

This is where it can pay to speak to a financial expert as you will then know for sure what you should and shouldn’t be doing.

How we can help you plan your early retirement investment strategy

If your goal is to retire early, the key is to put an early retirement investment strategy in place early. By taking proactive steps now and working out how you’ll build the right financial infrastructure, you’ll give yourself a much better chance of achieving your goal.

At Bowmore, we help people reach their retirement goals and could be able to help you retire even earlier than you expect.

Want to find out more about early retirement investment strategies? Get in touch with us today.


Phone: 01275 462 469

  • Bowmore Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority
  • The Financial Conduct Authority does not regulate cash flow Planning.
  • Bowmore Financial Planning Ltd is not regulated to provide tax advice
  • The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a guide to future performance

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