Money hacks Want to retire in your 50s? Here's how to plan it

Retiring in your 50s can seem like a pipe dream, particularly with the high costs of living and restrictions on accessing your pension until age 55 – rising to 57 in 2028.

- Harriet Meyer

Set a target income But with careful planning and consistent saving, you can boost your chances of an early escape from working life.

Start by working out how much income you will need in retirement. According to the Pensions and Lifetime Savings Association, a single person now needs about £31,700 a year for a moderate lifestyle, while a couple need £43,900 between them. These figures cover the cost of running a car, an annual overseas holiday and an off-peak long weekend break in the UK. Early retirees often spend more at first, packing in travel and hobbies while they are still active.

One way to guarantee an income for a set period, or the rest of your life, is to buy something called an annuity. In exchange for a lump sum, you get regular payments, but how big these are depend on your health and your age, and if you buy one in your 50s, you will get less each year than if you wait until you are older.

According to the financial advisers Hargreaves Lansdown, someone earning £26,000 a year and contributing the standard 8% (5% from their earnings and 3% from their employer) to their pension from age 22 to 68 could build a fund of about £235,000. This could generate an annuity income of about £16,000 a year in retirement on top of the state pension (currently £11,973 a year).

If they stopped making contributions and bought an annuity at age 57, their fund might be closer to £143,000 – reducing their annual income to about £8,000 before the state pension.

To retire at 57 with a £16,000 income from a personal pension, they would probably need to contribute about 13% of their salary throughout their working life on top of the 3% employer contribution.