A lot of people like to think about retiring early, but if someone seriously hopes to retire before their peers, that takes some planning.

Fortunately, it is possible even when someone leaves it relatively late in the day to get started.

Some guiding principles to make early retirement a possibility

Let me look at someone aged 40 with no investments.

Say they target a £1m portfolio of dividend shares by the age of 60 to help them then retire six years below the current State Pension age (which is set to rise).

Turning zero into £1m in 20 years is no small task. But is possible.

Some common sense principles apply, I reckon.

One is being willing to make chunky contributions. Another is using financial incentives offered by the tax system.

I think it is also important to manage risks wisely. Rushing to retire while still young-ish from a fairly late start can lead people to take big financial risks. That strikes me as understandable, but foolhardy.

It takes money to make money

Say someone can achieve a compound annual gain of 7%.

To go from zero to £1m in 20 years at that rate would take yearly contributions of around £24,450. That is a little over £2k a month on average.

Is a 7% compound annual gain realistic? After all, the current FTSE 100 dividend yield is 3.1% and although share price gains could help, share price losses might eat into the figure.

With a properly diversified portfolio of high-quality shares, I do see it as realistic.

The SIPP can offer some help here

The number I mentioned above is around 23% greater than the annual contribution allowance for a Stocks and Shares ISA.

One alternative could be to use a Self-Invested Personal Pension (SIPP). With tax relief, someone who invests £24,450 annually through a SIPP need only contribute roughly £19,560. For higher or additional rate taxpayers, that could be even less: £14,670 or £13,448, respectively.

Admittedly, almost £20k is still a lot of money for a standard rate taxpayer to spare. A smaller amount could also work, albeit the retirement pot would be smaller. If, say, £500k not £1m was the target, the monthly contribution could be halved.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Both ISAs and SIPPS have pros and cons, so it is important to research them properly when planning for retirement, whenever you aim to take the plunge.

Buying high-quality shares

One income share I think is worth considering in the current market is 6.3%-yielding M&G (LSE: MNG).

The firm aims to keep growing its dividend per share annually.

In practice no dividend is ever guaranteed to last. Whether it does depends on a company’s financial performance as well as spending priorities.

As an asset manager, M&G has a large target market and one I see as likely to endure over the long term.

It already has millions of clients across multiple markets. With a proven business model and strong brand, it is highly cash generative.

One risk I see is current financial market turbulence leading some policyholders to pull money out of funds. That could hurt earnings for M&G.

Over the long term, though, I like its prospects.

Should you invest £5,000 in M&g Plc right now?

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Christopher Ruane has no position in any of the shares mentioned.