A pension pot of £1.3m is now required to fund a comfortable early retirement at 55-years-old, interactive investor has revealed.

The findings come as industry rumours suggest a possible return of the pension lifetime allowance, which was formerly £1,073,100, ahead of the General Election.

New calculations by the investment platform found that for a comfortable retirement at 55-years-old, £1.3m is required with 2% inflation factored in, if they retire in 2024. This is an extra £495,000 compared to if they retired at the state pension age of 67.

Furthermore, for a 60-year-old to match the same retirement living standard, just under £1.1m is required, which is £315,000 more than if they retired at the state pension age.

Head of pensions and savings at interactive investor, Alice Guy, said: "Many of us dream of early retirement but to get there in style you’ll need a seriously large pension pot. If you’re aiming to retire at 55-years-old with a comfortable standard of living in retirement, you’ll now need a pension pot worth an eye-stretching £1.3m, based on the PLSA retirement living standards.

"With Labour rumoured to be considering reintroducing the lifetime allowance, which was previously around £1.1m, it’s thought provoking that this previous level of allowance was arguably not enough for a comfortable retirement if you plan to retire early. This may seem like a high figure, but it factors in future inflation and needing to plug a long gap before the state pension kicks in."

For a moderate level of retirement, interactive investor has found that a pot of £857,000 is required for early retirement, while in contrast, £230,000 is needed to fund a minimum retirement standard of living.

Respectively, these figures are an extra £350,000 and £145,000 required compared to retiring at the state pension age.

Guy added: "For a basic no-frills standard of living in retirement you now need a pension pot worth just over £200,000 to retire at 55-years-old. This would give you a modest income of around £15,000 each year which is only really liveable if you have no housing costs.

"With many of us living for longer, retiring early could mean you need to fund over 30 years in retirement and inflation has a big impact on how much you need, £100,000 saved now will be worth a lot less in 15 years, meaning you may need more than you think to achieve a decent standard of living in retirement.

"With the rising state pension age, it’s important to plan ahead and prioritise your future finances. For many of us, working into our late sixties simply isn’t appealing or even possible. In the future we’ll be increasingly reliant on our own pension savings to fund retirement, especially if we’re aiming to retire early."

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