I'm 48 with £800,000 in my pension, can I afford to retire early?

I am a 48-year-old man, who is married with an eight‑year‑old son. I work in the banking industry, which is undergoing rapid change due to new technology and artificial intelligence‑driven automation.

I currently have approximately £800,000 in a company pension scheme, along with additional savings in an Isa, and I am mortgage‑free. 

My pension has grown significantly over the past five years, probably due to strong stock market performance and the rise of AI‑related investments. I am concerned, however, that its value could fall sharply before I reach retirement.

Although I am still some years away from the traditional retirement age, my concern stems from my health. 

I underwent triple heart‑bypass surgery at 46, and earlier this year I required brain surgery. 

These experiences have made me question how many healthy years I may have ahead of me. As a result, I am wondering whether it would be wiser to prioritise enjoying life sooner and retiring rather than continuing to build a larger pension pot.

Jane Denton, of This is Money, replies: As well as having £800,000 in pensions, you also told me you have £290,000 in Isas too, which is a crucial extra point as you will not be able to access your pension for some years.

You say think you could be put at risk of redundancy in the future given the rapid growth of artificial intelligence in your workplace. You have received no indication redundancy could be on the cards, but it is a risk that should be considered. 

Many people who start experiencing health problems naturally begin to think about their future. And in your case, you work in a high-pay but high-pressure sector. 

According to official figures last year, people aged between 45 to 54 typically have about £80,000 in pensions, but you have been able to build an £800,000 pot.  

In June, trade body Pensions UK warned more than three-quarters of people were not on course to save enough for a 'moderate' lifestyle in retirement.

Its benchmark report shows a 'moderate' lifestyle currently costs £32,700 a year for an individual and £45,400 for a couple. It said just 23 per cent of the working population would reach such a level.

A comfortable lifestyle in retirement is estimated to cost £45,400 annually for a single person and £62,700 for a couple -  only 9 per cent of workers are in line to get to that level. 

You have healthy sums in your pension and Isas, but will need to consider your future cash needs if you want to retire imminently. 

You are considering moving all or some of your pensions into cash or bonds, you should get financial advice before taking this idea further and it may be wise to seek out the help of a financial adviser whatever you choose to do.

I asked two experts for their response to your question. 

> How to find a good financial adviser: What should you ask before going ahead? 

Would you run out of money? 

Marianna Hunt, personal finance specialist at Fidelity International, said: The key question is: can you afford to retire now?

There are two important numbers to establish first: how much you expect to spend each year in retirement, and how much you have available to fund it.

You say you have £800,000 in your pension and £290,000 in Isas. The latter is very important because most people cannot access their pension until the 'normal minimum pension age' – currently 55 but rising to 57 from 2028. 

Some people have a protected pension age allowing earlier access, so check with your workplace scheme.

You may also be able to access your pension earlier if your health means you can no longer work. 

This is known as ill-health retirement and your pension provider can tell you whether you qualify. Separately, if you’re under 75 and have a life expectancy of less than a year, you might be able to take all your pension as a tax-free lump sum.

I assumed from your description of your £800,000 pension pot that this is a defined contribution pension. If it's a defined benefit, or final salary, pension, the considerations would be quite different.

To illustrate how the numbers could stack up, I used our cash flow modelling tool to look at an example of someone retiring at 49 with £800,000 in their pension and £290,000 in an Isa. I assumed the following:

• A spend of £30,000 a year, rising with inflation;
• Receiving the full state pension from the age of 67;
• Inflation averaging 2.5 per cent; and
• Your investments return 6.06 per cent a year, with account fees of 0.41 per cent.

Our model suggests, on these assumptions, you may not run out of money before 100 and could still have the equivalent of more than £1.5million in today’s money remaining at that point. 

You could potentially increase spending to £40,000 per year, although by age 99 your pot may be running dangerously close to zero. This assumes you don't qualify for ill-health retirement and so need to rely on your Isa investments until age 57. Remember: these are forecasts, not guarantees.

Your actual spending could also look quite different. Your son is only eight, so you may want to budget for significant future costs such as education or helping him onto the property ladder. Poor health can potentially increase expenditure too.

It is also worth considering what would happen financially if your health deteriorated further or you died.

Before leaving work, check what protection your employer provides. This could include death-in-service cover, income protection, critical illness cover, and enhanced sick pay, which you may lose when you leave. 

Check any personal life insurance too. If your family would struggle financially if you died, you could investigate additional cover, although your medical history is likely to affect its availability and price. Make sure your pension beneficiary nominations and will are also up to date.

What if the stock market falls?

You are understandably concerned about a market fall affecting your £800,000 pension. 

Start by establishing exactly how it is invested. Workplace pensions commonly have a default investment strategy, but yours may offer alternative funds. 

Check whether it uses 'lifestyling', which automatically reduces investment risk as you approach your selected retirement age, and make sure the age recorded by the scheme reflects your plans.

Some people do reduce investment risk as retirement approaches. But when you plan to access the money matters. If you cannot access your pension until 57, you potentially have another eight years before drawing on it. 

And if your health proves better than feared, you could need your investments to support you for 40 years or more. Moving too much into cash too early could leave your money struggling to keep pace with inflation.

Your Isa may need a different approach if you intend to spend it much sooner. Some retirees keep several years’ planned withdrawals in cash so they are less likely to have to sell investments following a market fall.

Finally, you mentioned concerns about redundancy. Before resigning, find out what you could receive if you were made redundant. 

Leaving voluntarily could mean giving up a potentially valuable redundancy package as well as employee benefits. Retirement need not be all or nothing either. You could explore going part-time or, if you are made redundant, finding a lower-stress role that gives you more time with your family while continuing to bring in some income.

Remember that, once you’ve left the workforce, it can be very difficult to get back in later should you want or need to. Our Longer Working Lives Index recently highlighted the challenges facing workers in midlife and beyond, with the UK ranking bottom in the G7 for supporting over-55s to remain in work.

Given the sums involved and the interaction between your health, family, pension and employment benefits, this is one situation where professional financial advice could be particularly valuable.

How much will you spend in the future? 

Ed Wood, financial planning director at Rathbones, said: While pensions provide a very tax efficient way to save, there is always a balance between using money today or saving for the longer term, which is simply deferring future expenditure. 

We would start by looking at long-term cashflow planning. How much do you spend and save at present, and how much might you want to spend in future? 

This would allow us to model whether your existing savings in pensions and Isas would be able to fund retirement. 

We cannot know how the future will pan out so we model different retirement ages and different levels of earnings over that period. 

You should also factor in any potential gifts you may wish to make to your son, perhaps for education or a future property deposit.

If these show that you could reduce your current savings rates, while still being in a secure position for the future, then it does make sense to enjoy life sooner. 

Not necessarily what you expect to hear from an adviser, but this could include taking a couple of dream holidays, while you can still enjoy them, or looking to retire sooner. 

We only get one life and few people on their deathbed say 'You know what, I wish I’d spent a bit more time in the office.'

We would also consider what may happen in the event of your death, or if you became too ill to work. Are there sufficient assets for your son and partner, if you have one? 

This would factor in any existing insurance that you have, both directly and through work, as there may well be income protection and death-in-service cover from your employer.

Finally, given your recent health travails, I expect your will and pension expression of wish are up to date. If not, do please get them reviewed, especially given the changes that will bring pensions into the inheritance tax regime from April 2027.