Can You Retire at 62 in the UK?
Retiring at 62 is achievable for many people, though you will still need to bridge 5 years before State Pension age.
How Much Do You Need to Retire at 62?
The amount you need depends on your desired lifestyle. The Pensions and Lifetime Savings Association (PLSA) defines three retirement living standards:
- Minimum: £14,400 per year (single) — covers essentials plus a UK holiday and basic leisure
- Moderate: £31,300 per year (single) — includes European holidays, car, and more flexibility
- Comfortable: £43,100 per year (single) — regular holidays, new car, home improvements
Can You Access Your Pension at 62?
Yes. You can currently access defined contribution pensions from age 55 (rising to 57 from April 2028). You can take up to 25% as a tax-free lump sum, with the remainder available through drawdown, annuity, or cash withdrawals.
Tax Implications of Retiring at 62
When you access your pension, 25% is tax-free. The remaining 75% is taxed as income. If you take large lump sums, you could be pushed into a higher tax bracket. Spreading withdrawals across tax years is usually more efficient.
Bridging the Gap to State Pension
If you retire at 62, you have 5 years before receiving State Pension at age 67. Strategies to bridge this gap include:
- Drawing from your pension pot at a sustainable rate (typically 3.5-4% per year)
- Using ISA savings for tax-free income
- Part-time or freelance work
- Rental income from property
- Drawing from investment portfolios
Making Your Pension Last
Retiring at 62 means your savings could need to last 28+ years. Key strategies include:
- Withdraw no more than 3.5-4% per year from drawdown
- Keep 2 years of expenses in cash to avoid selling investments during downturns
- Maintain a diversified investment portfolio even in retirement
- Review your withdrawal rate annually and adjust as needed
- Consider a partial annuity for guaranteed baseline income