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60% to retire early this year

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Nearly six in ten people planning to retire this year will be doing so early, according to a survey.

And many of them seem willing to take a hit on their annual retirement income in exchange for giving up work early, the research by Prudential found. The average expected retirement income for people retiring early is £16,800, compared with £19,000 for those who not are planning to do so.

The study suggests early retirees are savvy about their preparations for retirement – for example they are far more likely to have saved into a pension.

They are also likely to have consulted a financial adviser more recently and are better informed about ongoing changes to pension legislation.

They are more likely to have changed their plans based on the pension freedoms and more of them are aware of the new flat rate State Pension coming into effect this April.

The study also found the type pf pension scheme people belong to appears to be a significant factor in determining whether they retire early. Perhaps unsurprisingly, 51% of 2016’s early retirees have the majority of their retirement savings in a final salary scheme, compared with only 38% of people who aren’t planning to retire early.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “We’re seeing expected retirement incomes take a long time to recover to their pre-financial crisis levels, so it is striking to see that many people retiring this year are stopping work early. We hear a lot about future generations having to work until they drop, which is of course a little over the top. But as fewer people over time benefit from generous final salary pensions, it will mean that anyone looking to retire early needs to prepare well in advance.

“There are valuable lessons to be learned from this year’s early retirees, and the main characteristic they demonstrate is being financially well-prepared. The Government’s free and impartial Pension Wise guidance service can help more people make the right decisions in the run up to retirement.”

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