Looking for advice from those who have retired early

[OnTheBeach]

Looking to retire at 46 in the next 6 months - what do I need to know?
I know I will have COBRA for 18 months and I need to rollover my 401K to an IRA.
What happens to Social security if I don't work for 20 years before I am eligible?

 

[aida2003]

Sorry, but if you cannot answer such important questions by now, I'm not sure you're ready to retire yet. I'd advise you to research all the important questions before jumping the ship. You could search this forum for sure. I cannot assist you as I'm not there yet, but I'm sure I'll start my research 2-3 years before I leave workforce especially if I potentially retire early like you

 

[Fedup]

You need 35 years for SS. Minimum is 10. Anything in between, you get some partial amount.


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[VFK57]

If you pay the SS Taxes for at least 10 years or more then you can access the SS Administration and create user name and pass word. All information could be found there (payments made, annual earnings). Also there is SS estimate website where you can input all your earnings and SS Tax payments for the years worked, input that you stop working this year and there will be an estimated payment for 62, 66 or 70 yo retirement.
https://www.ssa.gov/planners/retire/AnypiaApplet.html

 

[FreeBear]

Looking to retire at 46 in the next 6 months - what do I need to know?
I know I will have COBRA for 18 months and I need to rollover my 401K to an IRA.
What happens to Social security if I don't work for 20 years before I am eligible?

Actually, there's tons you need to know, especially planning to retire at such an early age, especially without an amazing defined benefits pension.

Here's a good start, from our forum FAQ's:

http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

I ER'd at 45 and have been living dream for 9 months. I found these were key concerns retiring so young and they are detailed in the above links.

1) Do you have enough in savings and/or pension to support ALL expenses, both monthly and occasional (health care deductible, new roof, new car, etc)?

2) How will you get at your 401K/IRA money without paying excessive penalties or otherwise survive before 59.5 yrs of age? At your age, SS is the least of concerns, although it can be a big help later.

3) How will you deal with health insurance? A careful study of healthcare.gov, the ACA website, is a very sobering experience.

4) What will you do all day in retirement? This is a personal psychological and even spiritual question that seems easy but may not be.

Good luck and feel free to come back w/ more specific questions.

FB

 

[mpeirce]

...and I need to rollover my 401K to an IRA.

You don't necessarily need to roll over your 401(k).

Most people do because an IRA usually offers more options and lower costs.

But keeping a 401(k) around sometimes has benefits. For example, some 401(k)'s offer stable value funds with offer better returns than money market funds you can get in an IRA.

Another example is you can tap a 401(k) sooner (age 55) than an IRA (59½) - but only if you retire at age 55 from the same employer who offered the 401(k). Guess that won't apply to you...

Finally, 401(k) are protected from judgements by federal law. IRA are covered by state law and that varies.

Personally (FIREd at 49). I rolled my 401(k) into an IRA.

 

[FreeBear]

Finally, 401(k) are protected from judgements by federal law. IRA are covered by state law and that varies.

Good point mpeirce. This is the main reason I've kept my old 401K after retirement. The plan choices meet my needs well (low ER Vanguard stock and bond index funds). Also, I FIRED just this year, so I've got enough to manage at this point, primarily ACA health insurance, tax efficiency, and budgeting.

At some point, I'll investigate a partial rollover for Roth conversion purposes. If the 401K changes in some undesired way, then I'll execute a full IRA rollover. For now, no hurry...

 

[OnTheBeach]

Thank you for all the support!
mpierce: I was unaware of the differences in legal protection between an IRA and 401K
FreeBear: I will review the FAQs tonight.
Fedup & VFK 57: Thanks for the SS info


Been looking forward to retirement for several years and am financially set - looking forward to my next adventure

 

[papadad111]

Good point mpeirce. This is the main reason I've kept my old 401K after retirement. The plan choices meet my needs well (low ER Vanguard stock and bond index funds). Also, I FIRED just this year, so I've got enough to manage at this point, primarily ACA health insurance, tax efficiency, and budgeting.



At some point, I'll investigate a partial rollover for Roth conversion purposes. If the 401K changes in some undesired way, then I'll execute a full IRA rollover. For now, no hurry...

FB. Also retired at 45 still in 1st year post FIRE. Also keeping 401k as is- not rolling over yet. Might move it down the road but as you say, no hurry.

Enough to deal with drawdown plans, quarterly income taxes, ACA healthcare, and post-fire + new location and settling DW and DSx2 in, developing and implementing the post fire household operating budget. Etc.

A big challenge has been navigating family health insurance, the ACA and healthcare options and providers. Cost keeps going Up and up and painful / no subsidy. It's a jungle out there .. . Not for the weak.

Settling into new location has been much harder than anticipated too.

 

[FreeBear]

FB. Also retired at 45 still in 1st year post FIRE. Also keeping 401k as is- not rolling over yet. Might move it down the road but as you say, no hurry.

Enough to deal with drawdown plans, quarterly income taxes, ACA healthcare, and post-fire + new location and settling DW and DSx2 in, developing and implementing the post fire household operating budget. Etc.

A big challenge has been navigating family health insurance, the ACA and healthcare options and providers. Cost keeps going Up and up and painful / no subsidy. It's a jungle out there .. . Not for the weak.

Settling into new location has been much harder than anticipated too.

Hey Papadad,

Very impressed you managed to FIRE at 45 with 2 kids! We got out early, but we were DINKS. Also amazed that you are also managing a big move. Well we sold 2 houses and bought a new (to us) one in the last 3 years. We did or at least managed the remodeling of all 3 houses. You'll be so glad when it's over and you're all settled in

Agreed, re healthcare it really is a jungle no there... Not for the weak. Best to stay healthy...

FB

 

[jabbahop]

Another thing to factor in is college expenses and need based financial aid. The formulas for financial aid don't count your 401k/Ira but do count taxable accounts and income. For us we have substantially more in taxable than retirement accounts and I think they include about 5% of those in the family contribution calculations. 5% of $1m in counted assets means they want you to pay $50k of the college annual expense assume you have $0 taxable income (another part of the formula).

For us this means essentially no financial aid beyond any merit grants our kids get.

Just another big expense to plan for.




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[papadad111]

Nothing wrong with having kids work a bit to cover the gaps that financial aid don't cover.

Either that, or they can also opt to take a year off of school, financially emancipate, and then qualify for grants loans and work-study programs on their own without a look back to parental assets / net worth.