Retiring before 60: planning for income, pensions, and financial independence

24 September 2026

Can you retire before 60? Discover the key considerations around pension access, retirement income, ISAs, investments, tax planning and financial independence.

In conversation with Olly Cheng, Financial Planning Director

Article last updated 24 September 2026.

Get the planning right to make it a reality

Retiring before 60 is a question that comes up more than you might expect. People may want to start a second chapter, spend their time differently, or simply take back control of how they live.

We put the questions our clients ask most often to Olly Cheng, Financial Planning Director and one of Rathbones' most experienced retirement income planning advisers.

Early retirement is one of the most meaningful financial decisions you'll make. Get the planning right, and it can open up a different kind of life – one you've worked hard to reach.

This article provides general information only and does not constitute financial advice. Tax rules and pension legislation are subject to change. Please speak to a qualified financial adviser before making any decisions about your retirement planning.

Prefer to talk this through with someone? We can arrange a no-obligation conversation with an adviser.

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In brief

What is early retirement planning?

At its heart, it's about understanding whether work can become a choice rather than a necessity. Whether you're considering stepping back from work completely, reducing your hours, or simply gaining greater financial independence, early retirement planning helps you assess whether your finances can support the lifestyle you want for however long retirement turns out to be.

Can I retire before 60?

For many people, retiring before 60 is absolutely achievable – but it takes more planning than a standard retirement. The question is whether you have enough and requires careful planning to ensure your money is managed efficiently and remains sustainable over the long term. That's where careful planning can make a difference.

How can a Rathbones adviser help?

A Rathbones adviser can help you understand what early retirement – or semi-retirement –could look like for you, reviewing income needs, pension access, investment strategy, tax considerations, and long-term sustainability. This can be particularly helpful where retirement involves multiple pensions, investment portfolios, business assets, or family wealth planning objectives.

Meet Olly Cheng

Olly is a qualified financial adviser and Financial Planning Director at Rathbones. He has spent over 18 years helping clients navigate all aspects of retirement income planning, including pension drawdown and managing tax across multiple sources of his clients wealth. He also advises business owners on the transition from business wealth to personal retirement income.

What does financial independence mean?

Financial independence means having enough cash, investments, and income streams to cover your living costs indefinitely without needing to work. Retirement is the decision to stop, or significantly reduce, work. The two often coincide, but not always.

Many of the people we work with become financially independent before they formally retire. They may continue working by choice, building a business, taking on consultancy, or pursuing a second career, while knowing they no longer need employment income to sustain their lifestyle. Others step back gradually, giving themselves more choice without committing to a full exit.

Someone financially independent but still earning faces different challenges from someone who has stopped work entirely. Income streams interact differently, tax positions shift, and estate planning objectives evolve.

In most cases, early retirement planning is less about stopping work altogether and more about achieving financial independence. That means working out when the crossover point arrives and how to structure wealth to support life on your own terms. That's where we can help, by making sure your plan is robust enough to support you over the long term and adapt as your circumstances change.

A daughter hugs her mum while they have tea together in their kitchen

What does retiring before 60 really involve?

Most people who come to us for advice already have a rough idea of what they have accumulated over the years. This may be pensions, savings and other investments. What they're less sure about is whether it's structured correctly, and whether the plan will hold up throughout the duration of their retirement, which could be a long time. That's increasingly important when a typical 65-year-old can expect to spend around 20 years or more in retirement, according to the Office for National Statistics in 2025.

Why early retirement is different from traditional retirement

Most retirement planning assumes a starting point in the mid-to-late 60s, when the State Pension becomes available and workplace pensions can be accessed. Retiring before 60 removes both assumptions. The State Pension age is currently 66, rising to 67 between 2026 and 2028, with a further potential rise to 68 subject to government review. For someone retiring at 55 or 60, the gap before State Pension income arrives could be 10 years or more. Pension access is also restricted. Under current rules (August 2026), the minimum pension age will increase from 55 to 57 on 6 April 2028, with some protected arrangements allowing earlier access.

Early retirement means your money needs to work harder for longer, keeping pace with inflation while providing income across what could be 30 years or more.

Retiring at 55, 60 or phasing work gradually, including semi-retirement

Not everyone wants to stop work entirely. Increasingly, the conversation is about semi-retirement and what it means to step back rather than step away. That might mean moving from five days to two or three, taking on consultancy work, or choosing projects because you want to do them rather than because you need the income.

Semi-retirement has real financial and tax consequences that are easy to underestimate. If you're still earning, even part-time, that income combines with anything you draw from investments, or pensions. Taken together, these different sources can push you into a higher tax band more quickly than expected. National Insurance may also apply depending on your age and earnings.

As an adviser, I work with clients to help model what phased retirement looks like in practice. That includes structuring income from salary, investments, pensions and other income sources to make the most of available allowances at each stage.

Why the timing of retirement affects income planning

Retiring at 55: what should you consider?

Retiring at 55 requires careful planning. The minimum pension access age rises to 57 on 6 April 2028, so anyone retiring at 55 today may face a gap before pension access that must be funded entirely from ISAs, investment portfolios, cash reserves, rental income, or business sale proceeds.

With a potential 30-plus year retirement ahead, portfolios cannot afford to become too cautious too soon. Meaningful exposure to investments where the object is growth, is typically necessary to keep pace with inflation, even while income is being drawn. Whilst growth is important there is a trade of that higher risk investments are generally higher risk. Investments can go down as well as up and you could get back less than you originally invested.

Tax also requires equally careful attention. Capital gains tax when investments are sold, tax on future pension withdrawals, and income from different sources all need to be considered together. For people who have built up significant wealth through the sale of a business or another substantial financial event, making the right decisions can be even more challenging.

A Rathbones adviser with experience across income planning, investment management, tax, and estate planning is particularly valuable at this stage.

Retiring at 60: what changes?

Retiring at 60 is still early retirement by any conventional measure. The State Pension (currently 66, rising to 67 by 2028) remains some years away, and many retirees will still need to bridge a gap before other sources of guaranteed income, such as the State Pension or defined benefit pensions, begin. But the planning challenges differ from retiring at 55 in a few important ways.

The period between stopping work and receiving these later-life income sources is typically shorter. While many people can already access their defined contribution pensions by age 60, ISAs, investment portfolios and pension savings may still need to work together to provide income until other benefits become available. A 30-year retirement horizon remains realistic at 60, so meaningful growth investment is still required, although the balance between growth and income-generating investments may begin to shift.

For those who have sold a business or received a significant inheritance in their late 50s, retiring at 60 may also mean deciding how a substantial sum of money should be invested as a future source of income as part of a wider retirement plan. A Rathbones adviser can help structure income efficiently across multiple pension arrangements, investment portfolios, and ISAs from the outset.

How will you fund the years before pension access?

For anyone retiring before 60, the years between stopping work and accessing pension income often determine whether early retirement is sustainable.

Bridging the gap before pension access age

Under current rules, the minimum pension access age rises from 55 to 57 on 6 April 2028, with some protections for existing arrangements. That gap needs to be funded from other sources, typically cash reserves, ISAs, and investment portfolios. For those semi-retiring, earned income can help bridge part of this period, but the interaction between salary and investment income needs careful management to avoid unnecessary tax.

Using ISAs, investment portfolios and cash reserves

ISAs can be a useful source of income in the early years of retirement because withdrawals are usually free from income tax and capital gains tax. Investments held outside an ISA may also provide income, although selling them could result in capital gains tax depending on your circumstances. Cash is easy to access when you need it, but keeping too much money in cash can reduce its value over time as inflation means your money buys less.

A Rathbones adviser can help you decide how much to keep in cash for short-term spending and how the rest of your savings and investments might be structured to support your retirement goals while making use of available tax allowances.

How early withdrawals can affect long-term wealth

If investment returns are poor in the first few years of retirement and you're drawing income simultaneously, the impact on long-term wealth can be far greater than expected. This is sometimes called sequence-of-returns risk. It's about how much you withdraw and when.

Working with a Rathbones adviser, we can build and manage a well-diversified investment portfolio for your short-, medium- and long-term income retirement needs. We do this by investing across different investment types, geographies, and risk levels. This means you don't need to sell investments that are intended for long term, growth, at an unfavourable time in order to meet income needs in retirement.

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Which savings and investments should you draw from first?

The order in which savings and investments (including pensions) are drawn is one of the most important decisions in early retirement planning. It affects how long your money lasts and how much tax you pay along the way.

Sequencing income from cash, investments, ISAs and pensions

The right order will depend on your circumstances. You might draw from cash, ISAs, investment portfolios and pensions at different stages, taking account of the tax treatment and flexibility of each. For those in semi-retirement who are still earning, sequencing becomes more nuanced. Salary income uses up part of the personal allowance and basic-rate band, affecting how much can be drawn tax-efficiently from other sources. A Rathbones adviser can help build a retirement withdrawal strategy that takes account of earned income, tax allowances and the interaction between different sources of wealth.

Making the most of tax allowances as a couple

For couples, retirement income planning often goes beyond deciding which income options to draw on first. Where one partner retires before the other, there may be opportunities to structure withdrawals so that both individuals make full use of their available tax allowances and tax bands. This can help improve tax efficiency and preserve more of the family's wealth over the long term. The right approach will depend on your circumstances, but coordinated planning can make a meaningful difference.

A father and daughter laugh together while standing outside a restaurant

How pensions fit into early retirement planning

Pensions can play an important role in holding and eventually drawing retirement wealth, even for those who retire before they can access them.

Pension access age and future rule changes

Workplace pensions, personal pensions and SIPPs

Many people approaching early retirement hold a combination of workplace pensions from previous employers, personal pensions, and self-invested personal pensions (SIPPs). Each can have different access rules, charges, investment options, and death benefit provisions.
Working with a Rathbones adviser can help review existing arrangements and consider whether consolidation, transfer, or restructuring may be appropriate.

Pension income planning: drawdown, annuities and tax-free cash

Once pension access age is reached, the key question shifts to how to draw pension income most efficiently. Pension drawdown keeps a fund invested and allows flexible withdrawals but requires ongoing management and is subject to market fluctuations. The value of the fund could go up or down and you could get back less than you had invested. An annuity (a financial product which provides a guaranteed income for life regardless of investment markets) offers income certainty but at the cost of flexibility. Some people use a combination of both an annuity and a fund, and a Rathbones adviser can help model different scenarios.

Most pensions allow a tax-free lump sum of up to 25% of the pension fund, subject to the lump sum allowance (LSA), which is currently £268,275 for most people (those with pre-April 2024 protections may be entitled to more). Getting the timing and amount right matters. Taking too much too soon reduces the fund available for future income.

It’s also worth noting that the money purchase annual allowance (MPAA) applies once flexible income is taken from a defined contribution pension through drawdown. This reduces the amount that can be contributed to defined contribution pensions in future tax years from £60,000 to £10,000. For those in semi-retirement who are still earning and contributing to a pension, this is an important consideration before accessing drawdown.

What investment strategy supports early retirement?

Retiring early doesn't mean moving out of growth investments. A retirement that could last 30 years or more still requires meaningful growth to keep pace with inflation and sustain income.

Moving from accumulation to income without moving too cautiously

One of the biggest misconceptions about retirement investing is that portfolios should switch entirely from growth to income. In reality, many retirees continue to need long-term growth to help their wealth keep pace with inflation and support spending over several decades. The challenge with a fund that invests for growth, will normally invest in higher risk investments. This means that the value can go down as well as up, as it is not guaranteed.

Rather than focusing solely on the income generated by investments, a retirement strategy can draw on a combination of income and growth and carefully planned capital withdrawals, depending on your objectives, tax position and wider financial circumstances. A Rathbones adviser can help design a strategy that supports both today's lifestyle and tomorrow's needs, in line with your appetite for risk.

Managing timing risk in the early years

Poor investment returns in the first few years of retirement, combined with ongoing withdrawals, can have a disproportionate impact on portfolio longevity (how long will your money last). Strategies to manage this include holding a cash buffer covering one to three years of spending, diversifying across asset classes (different investment types), and maintaining flexibility about withdrawal amounts in difficult market conditions. This means long-term investments don't need to be sold at unfavourable times to meet day-to-day costs.

What tax issues should be considered before retiring early?

Tax is an important part of early retirement planning and becomes more complex in a phased or semi-retirement.

Income tax, capital gains, and ISA planning

Pension income is taxed as income in the year it is received. Drawing too much in a single year can push a large pension fund into a higher tax band, so spreading withdrawals across multiple tax years and coordinating them with other income sources can make a material difference.

Selling investments outside an ISA or pension may trigger capital gains tax on gains above the annual exempt amount, currently £3,000 per tax year. Tax rules can change, and current rates and allowances should always be confirmed with an adviser. ISAs remain one of the most valuable tools available. Income and gains within an ISA are free of both income tax and capital gains tax, and withdrawals don't affect the personal allowance.

The tax implications of still earning in semi-retirement

Semi-retirement can make your tax position more complicated because you may be drawing income from several sources at once. A part-time salary uses up part of the personal allowance and basic rate band before any investment or pension income is added. Draw too much from other sources and you can find yourself paying 40% tax on income you expected to be taxed at 20%, or losing your personal allowance entirely if total income exceeds £100,000.

National Insurance may also apply on earnings above the primary threshold until State Pension age. Structuring income across salary, investments, ISAs, and pensions to make the most of available allowances at each stage of a phased retirement is an important part of the planning a Rathbones adviser can help with.

How early retirement changes long-term planning

Retiring before 60 changes the shape of a financial plan, including how wealth is invested, protected against inflation, passed on, and used to support family objectives.

Inflation, later-life spending, and intergenerational wealth

A person retiring at 55 could spend more years in retirement than they spent working. Planning over that horizon means thinking about inflation, investment returns, healthcare costs, and changing spending patterns, while retaining enough flexibility to adapt.

A retirement income that feels comfortable at 55 may feel significantly less comfortable at 75 if it hasn't kept pace with rising costs. For families with significant wealth, planning may also need to accommodate supporting children through education, helping with property purchases, or building a legacy for grandchildren. These objectives need their own planning alongside personal retirement income needs.

Estate planning: the changing role of pensions

Early retirement is a natural moment to consider estate planning and inheritance tax. In recent years, many people have chosen to preserve pension wealth for later life or future generations because of its favourable inheritance tax treatment. That is set to change from April 2027, when most unused pension funds will be brought within the scope of inheritance tax for the first time. It's a significant shift for those with larger defined contribution pensions.

If you haven't revisited your estate plan in light of this, it's worth doing so. We're already helping families think through what these changes could mean for them.

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Retiring early after selling a business

For business owners, early retirement often follows a significant liquidity event, such as the sale of a business, a management buyout, or a partial exit.

Expand to read more

From concentrated wealth to sustainable retirement income

A business sale can generate a substantial lump sum, but converting it into sustainable retirement income requires careful planning. Proceeds may be subject to capital gains tax. Decisions about how to invest them, draw income from them, and structure them alongside existing pensions and ISAs all need to be considered together.

Many business owners have most of their wealth tied up in the business, with relatively limited personal pensions or investment portfolios built separately. For many, retirement means moving from having much of their wealth tied up in one business to holding a more diversified range of investments.

Deciding how to invest the proceeds and turn them into a sustainable income can be one of the biggest financial decisions a business owner makes. Where family members are involved, succession, family governance, and intergenerational wealth transfer also need to be considered alongside personal retirement income planning. A Rathbones adviser can help bring all of these threads together, ideally before a business sale is complete, when the most planning options remain available.

Why work with an adviser to plan your early retirement?

Retiring before 60 is achievable and, for many of the people I work with, it's one of the most exciting things we plan together. But it does need more thought than a standard retirement. The gap before pension access, the order in which you draw from different savings and investments, and the tax picture at each stage can all have a significant impact on how sustainable your retirement plan is. This is where professional financial advice can help.

I work with people to assess how pensions, ISAs, investment portfolios, cash reserves, and other income options may work together to support sustainable retirement income. That includes reviewing existing pension arrangements, modelling different retirement dates and income scenarios, and identifying the most tax-efficient withdrawal strategy through cashflow planning.

We also consider how retirement planning fits with wider objectives, including estate planning, family support, and long-term wealth preservation. I can also stress-test a plan against lower investment returns, higher inflation, and unexpected costs, so people can see how it might perform and where adjustments could be needed.

Where retirement plans involve multiple investments, substantial pensions, business assets, a significant cash event, or family wealth objectives alongside personal income needs, a Rathbones adviser can help coordinate the different elements. Pension decisions affect tax, tax affects investment strategy, and investment strategy affects what you can pass on. Tax rules are subject to change. We work with clients to help them in advance of tax changes and advise the options that are appropriate for them.

When choosing who to work with, it's worth considering the breadth of expertise on offer. Retirement income planning, pensions, tax, and investment management all need to sit together. It's also worth asking how they approach cashflow modelling (future income projections that consider what markets might do in the future aligned to your risk level and any future withdrawals you know of), how they're paid, and how they'll support you as circumstances change. At Rathbones, those conversations are ones we welcome.

For retirement cost assumptions, our guide on how much money you may need for retirement is a helpful starting point. This article focuses on the income structure and strategy questions that arise once you have a sense of what retirement might cost.

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Frequently asked questions

Can I retire before 60?

Retiring before 60 is possible for many people, but it depends on the income options available, expected spending, pension access timing, tax position, investment strategy, and how long retirement may need to last. The key question is not just whether there is enough wealth, but whether it is structured to provide sustainable income over a potentially long retirement. A Rathbones adviser can help assess whether early retirement is realistic for your individual circumstances.

What should I consider before retiring early?

Ask yourself the following questions. How will you fund the years before pension access? Which income options should you draw from first? How do you manage investment risk across what could be a 30-year retirement? How does your retirement plan fit with tax, estate, and family objectives? The answers will depend on your individual circumstances, which is why it can be useful to work through them with an adviser who can look at the full picture.

Can I use my pension if I retire before 60?

Pension access depends on the type of pension and the rules in place at the time. The minimum pension access age is rising from 55 to 57 on 6 April 2028, with some protections for existing arrangements. Anyone retiring before that age will need to fund income from ISAs, investment portfolios or cash reserves until pension access becomes available.

Defined benefit pensions (also known as final salary schemes) work differently and will usually have their own scheme retirement age. Some schemes may allow benefits to be taken earlier, although this often results in a permanently reduced level of income. Understanding the options available under your scheme can be an important part of early retirement planning.

A Rathbones adviser can help plan for any gap before pension access and assess how different pension benefits fit into your wider retirement strategy.

What sources can provide income before pension access?

Is retiring at 55 different from retiring at 60?

How does tax affect early retirement planning?

Tax affects which income sources are drawn and when, how investment gains are realised, and how pension income is taken. Careful coordination across pensions, ISAs, investment portfolios, and other sources can significantly improve the overall efficiency of a retirement plan. A Rathbones adviser can help model different scenarios and identify a tax-efficient approach for your circumstances.

What if I want to semi-retire rather than stop work completely?

Who can help me retire before 60?

Do I need a financial adviser to retire early?

Not everyone chooses to work with an adviser. However, where retirement plans involve multiple pensions, investment portfolios, business assets, tax considerations, or family wealth planning objectives, a Rathbones adviser can help you understand the options available and the trade-offs involved. Another benefit is the peace of mind working with an adviser can provide. Being able to discuss and model your unique situation and retirement goals and feel confident about your financial future, is of great value to many people.

What should I look for in a financial adviser with early-retirement planning?

Should business owners plan differently for early retirement?

Yes. Business owners need to consider how sale proceeds are invested and drawn, as well as how to move from concentrated business wealth to a diversified portfolio. Succession, tax, and family governance considerations also need to be considered alongside retirement income planning. The earlier these conversations begin, ideally before a sale is complete, the more options are available.

Where can I estimate how much retirement might cost?

Key takeaways

Retiring before 60, whether fully or through semi-retirement or phased retirement, requires a plan for funding the years before pension access, which rises to age 57 on 6 April 2028 under current rules.
Financial independence and retirement are related but different. Many people become financially independent before they formally retire, and planning for that crossover requires careful, integrated thinking.
Retiring at 55 and retiring at 60 create different planning challenges, primarily around the gap before pension access, State Pension age (currently 66, rising to 67), investment strategy, and tax.
The order in which income sources are drawn, including cash, ISAs, investment portfolios, and pensions, affects tax, flexibility, and long-term wealth.
Semi-retirement introduces tax complexity. Salary is considered alongside investment and pension income and can push you into a higher tax band faster than expected.
Once flexible income is taken from a defined contribution pension through drawdown, the MPAA (Money Purchase Annual Allowance) reduces future pension contribution limits to £10,000 per year. This is important for those in semi-retirement who are still contributing.
From April 2027, most unused pension funds will be brought within the scope of inheritance tax for the first time, a significant change for those with larger defined contribution pensions.
Business owners with concentrated wealth need to coordinate personal wealth, business assets, pensions, and estate planning as part of an integrated early retirement plan.

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Retiring before 60: planning for income, pensions, and financial independence

Get the planning right to make it a reality

In this article

In brief

What is early retirement planning?

Can I retire before 60?

How can a Rathbones adviser help?

Meet Olly Cheng

What does financial independence mean?

What does retiring before 60 really involve?

Retiring at 55: what should you consider?

Retiring at 60: what changes?

How will you fund the years before pension access?

Bridging the gap before pension access age

Using ISAs, investment portfolios and cash reserves

How early withdrawals can affect long-term wealth

Discuss a retirement plan with one of our experts

Which savings and investments should you draw from first?

Sequencing income from cash, investments, ISAs and pensions

Making the most of tax allowances as a couple

How pensions fit into early retirement planning

What investment strategy supports early retirement?

Moving from accumulation to income without moving too cautiously

Managing timing risk in the early years

What tax issues should be considered before retiring early?

Income tax, capital gains, and ISA planning

The tax implications of still earning in semi-retirement

How early retirement changes long-term planning

Inflation, later-life spending, and intergenerational wealth

Estate planning: the changing role of pensions

Retiring early after selling a business

Why work with an adviser to plan your early retirement?

Frequently asked questions

Key takeaways

Make a retirement plan with one of our experts

More articles about retirement planning

Why relying on your business alone for retirement could leave you exposed to risk

Retirement planning if you have significant wealth

International retirement planning: making your wealth work across borders

Exit timing for law firm partners

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