Can I retire at 60? A UK worked example you can change

At 60 your pensions can usually be drawn, but the state pension is still about seven years away for most people. So the question is whether your pots can pay for those years and still last.

The calculator is a worked example: someone aged 54 retiring at 60, with £360,000 in a workplace pension, an ISA and cash today. Your money lasts to 95, with £66,428 left.

The gap to the state pension

For anyone born after 5 March 1961 the state pension starts at 67 or later. Retiring at 60 means paying your own way for about seven years. In this example those 7 years are paid from: Workplace pension £220,066 (totals in today's money). Once the state pension starts, the pots only top up the difference.

How long different pots last if you retire at 60

Each row uses the same assumptions: £30,000 a year take-home in today's money, 80% of the pot in a pension and 20% in an ISA, 5% growth a year before fees, 2.5% inflation, and the full state pension from 67.

Pots at 60	Steady growth: money	Lasts to 95 in
£300,000	falls short from 72	2 out of 100 market tests
£500,000	falls short from 87	30 out of 100 market tests
£800,000	lasts to 95	78 out of 100 market tests

The last column tests each pot 500 times, each with a different random mix of good and bad years in the markets, and shows how often the money lasts to 95.

Tax on income from 60

• Up to 25% of each pension can usually be taken tax-free, up to £268,275 in total. The rest is taxed as income.
• Before the state pension starts, your personal allowance of £12,570 can be used by pension income alone. Once the full state pension starts it uses almost all of the allowance.
• The calculator's tax-smart order fills your allowance and the 20% band from pensions, and uses tax-free pots instead of paying 40%.

What the stress tests show

In this example a 25% market fall in the first year of retirement means the money still lasts to 95. With growth 2 points lower every year it falls short from 82. In 54 out of 100 market tests it lasts to 95.

National Insurance and your state pension

National Insurance is paid on earnings from work. Stopping work at 60 can leave gaps in your record before state pension age. You need 35 qualifying years for the full new state pension if your record started after April 2016, and at least 10 for any. Your GOV.UK forecast shows your record.

Related questions

• Two of you? Tick "Planning for two" to give each person their own tax allowance and state pension.
• Got a final salary pension with a normal pension age of 65? See taking a final salary pension early.
• When exactly does your state pension start? See state pension age and amount.