Ready for Early Retirement? Start with Smart Investing

Early retirement is a dream shared by many: more time for travel, hobbies, family, or simply a slower pace of life. Yet, turning that dream into reality takes more than wishful thinking. It requires a solid financial plan, steady saving habits, and smart investment choices.

At APS Bank, we understand that early retirement does not mean the same thing to everyone. For some, it is stepping away from full-time work at 55. For others, it is reaching financial independence in their 40s to pursue passion projects or freelance work. Whatever your version looks like, one thing remains true: investing early and wisely can make it possible.

In this article, we will explore what early retirement actually involves, how much you may need to achieve it, and why building an investment strategy today could help you enjoy more freedom tomorrow.

What Does Early Retirement Mean?

In essence, early retirement is about:

• Funding your lifestyle through savings, investments, and private income sources
• Gaining financial independence earlier than most
• Choosing how and when you work or whether to work at all

Whatever your version of “early” looks like, retirement does not mean doing nothing; it simply gives you more control over how you spend your time. With solid financial planning and a well-structured investment strategy, it is a realistic goal.

How Much Will You Need?

One of the biggest questions around early retirement is: how much money will I actually need save?

This depends on:

• When you plan to retire.
• How long you expect to live.
• Your lifestyle and monthly expenses.
• Whether you will still have debts or a loan.

A common rule of thumb is the 25x rule: multiply your desired annual income by 25. So, if you want to live on €25,000 a year, you will need a pot of around €625,000. This provides enough to draw down each year, allowing your remaining investments to grow in the meantime.

Another method is the 4% rule, you aim to withdraw 4% of your investment pot each year to maintain your lifestyle without running out of funds.

Yet, keep in mind, these are just starting points. Inflation, healthcare, and unexpected costs can all affect your plan, so always build in a buffer.

The Importance of Starting Early

Time is your biggest ally when saving for early retirement. Thanks to compound growth, the sooner you start investing, the more your money will grow.

For example, saving €200 per month from age 25 could build a pension pot worth over €150,000 by age 55 (assuming 5% annual return). Start just 10 years later at age 35, and you may only reach €88,000 with the same monthly effort.

At APS Bank, we offer investment solutions designed to help you take advantage of this growth. Whether you are in your 20s, 30s, or beyond, the best time to start investing for early retirement is today.

Building Your Early Retirement Plan

Here are the key steps to help you prepare:

1. Set a target retirement age: it is important to choose a realistic retirement age and your decision should be based on the savings potential and desired lifestyle at retirement. Time is the biggest contributor to investment returns so the shorter the timeframe, the higher the required savings amounts.

2. Estimate your retirement expenses: be realistic about your future lifestyle. Will you downsize? Travel more? Pay off your mortgage? Knowing your expected costs helps set savings goals.

3. Eliminate debt: entering retirement with loans or a mortgage can place added strain on your budget.

4. Increase your savings rate: put aside more than the standard 5–10% of your income if you are aiming for early retirement. Look for ways to boost your savings through budgeting or increasing income.

5. Invest wisely: cash savings alone will not deliver the growth you need. Consider investing in diversified assets like stocks, bonds, and funds.

Why Investing (Not Just Saving) is Key

Saving money is important, but savings accounts alone will not get you to early retirement. With interest rates often lower than inflation, long-term savers may see their money lose value in real terms.

Investing, on the other hand, allows your money to work harder over time.

Here is why it matters:

• Higher potential returns: especially when investing in diversified assets over decades
• Compounding growth: earn returns not just on your investment, but also on previous gains
• Greater flexibility: many investment products allow earlier access to funds, offering added versatility when planning for early retirement ahead of the standard pension age.
• Customisable to your goals: you can increase contributions as your income grows, or adjust risk levels as you near retirement.
• Manage risk with cost-dollar averaging: investing regularly, regardless of market conditions, helps reduce price fluctuations and build long-term value, especially in more volatile or speculative assets.

Get Started with APS Bank

It is never too early, nor too late, to start planning for retirement. At APS Bank, we offer a range of investment solutions that can help you build the future you dream.

Why Choose APS Bank?

• Tailored investment solutions to match your income, age, and risk profile.
• Expert guidance from our financial advisors.
• Simple, transparent plans with no hidden fees.
• Ongoing support, including regular reviews to keep you on track.

Whether you are new to investing or looking to grow your wealth more strategically, we are here to help. Explore our investment solutions and fill out the form below to book an appointment with our team.

This information shall not be deemed as investment, tax or any other form of professional advice. You should consult your independent legal, investment or other advisors to ensure that any decision you make is suitable for you with regards to your specific circumstances and financial situation.

Approved and issued by APS Bank plc as the distributor of the Scheme and the protector of the Trust.  APS Bank plc is regulated by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994 and to carry out Investment Services activities under the Investment Services Act 1994. The APS Personal Pension Plan is licensed and regulated as a personal retirement scheme by the Malta Financial Services Authority in terms of the Retirement Pensions Act (Chapter 514 of the Laws of Malta). Praxis PES Malta Limited is authorised by the Malta Financial Services Authority to act as a Retirement Scheme Administrator to Retirement Schemes registered under the Retirement Pensions Act, 2011. Terms and conditions apply and are available on apsbank.com.mt/personal-pension. There is no statutory provision for compensation in the case where a retirement scheme is unable to satisfy the liabilities attributable to it and the license of the Scheme is not an endorsement by the MFSA of the Scheme’s financial performance.  All prospective Contributors and/or Members should consult their own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of a contribution to the Scheme.