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Scared to retire early...
Old 09-04-2019, 10:15 AM   #1
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Scared to retire early...

I'm 57 and my financial advisors are suggesting that I consider early retirement. I'm currently unemployed and am finding it difficult to find employment due to ageism. Fortunately I have the means to retire early but I don't want to pay penalties. Has anyone had any experience with form 72(t) or retired early without paying penalties?
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Old 09-04-2019, 10:19 AM   #2
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I've used the 72(7), Rule of 55 and SEPP tools, not problems with the right documentation....
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Old 09-04-2019, 10:25 AM   #3
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Your concern with penalties suggests that your assets are completely locked up in tax-deferred plans. But you give so little detail about your overall situation. Perhaps you could answer these questions so that we can give better suggestions:


Some Important Questions to Answer Before Asking - Can I Retire?
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Old 09-04-2019, 10:35 AM   #4
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I've used the 72(7), Rule of 55 and SEPP tools, not problems with the right documentation....
Thanks for this. I will look into 72(7). I haven't heard of it before. I'm a complete newbie to retirement so the insight is helpful.
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Old 09-04-2019, 10:37 AM   #5
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Thanks for this. I will look into 72(7). I haven't heard of it before. I'm a complete newbie to retirement so the insight is helpful.
It's actually 72(t).
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Old 09-04-2019, 10:43 AM   #6
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Quote:
Originally Posted by Island Style View Post
I'm 57 and my financial advisors are suggesting that I consider early retirement. I'm currently unemployed and am finding it difficult to find employment due to ageism. Fortunately I have the means to retire early but I don't want to pay penalties. Has anyone had any experience with form 72(t) or retired early without paying penalties?
How much do you have in tax-deferred, tax-exempt, and taxable accounts?

Will you have any pensions besides SS?

Any significant debts?

What is your annual spending going to be in retirement? Including healthcare.

Are you married? Does your spouse work/will he/she continue working?

Have you plugged your numbers into firecalc?
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Old 09-04-2019, 11:05 AM   #7
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Do you have any Roth contributions or conversions that can be tapped penalty free prior to age 59 1/2?

Contributions are immediately available for withdrawal.

Conversions, however, each have their own 5 year clock before being available for withdrawal penalty-free prior to age 59 1/2.

This was my tactic for handling income needs in ER.

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Old 09-04-2019, 11:11 AM   #8
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Some 401(k) plans can be accessed penalty free at age 55. Does this apply to you?
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Old 09-04-2019, 11:18 AM   #9
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Quote:
Originally Posted by Island Style View Post
I'm 57 and my financial advisors are suggesting that I consider early retirement. I'm currently unemployed and am finding it difficult to find employment due to ageism. Fortunately I have the means to retire early but I don't want to pay penalties. Has anyone had any experience with form 72(t) or retired early without paying penalties?
If some of your tax-deferred funds are in a 401k or 403b or similar, you can access penalty free if you ended service in or after the year that you turned 55.

If your tax-deferred is mostly IRA you can do 72(t) distributions.

More info needed to give you better advice.

Presumably your financial advisors know your age, what types of accounts your money is in and considered all of that in suggesting early retirement. Have you raised this penalty issue with them? If so, how did they respond.
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Old 09-04-2019, 11:58 AM   #10
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I'm 57 and my financial advisors are suggesting that I consider early retirement. I'm currently unemployed and am finding it difficult to find employment due to ageism.
Are you looking for jobs outside your normal work domain? Having the means to retire probably means that you can look for a lesser-paying job and not be tied into what you had done before.

Where I live there are plenty of jobs for the taking. Anyone who wants to work could do so.

Quote:
Fortunately I have the means to retire early but I don't want to pay penalties.
Do you have no funds at all that would tide you over until 59 1/2? Your financial advisors should be able to make some suggestions.
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Old 09-04-2019, 12:05 PM   #11
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Some 401(k) plans can be accessed penalty free at age 55. Does this apply to you?
+1

When people over age 55 say they may need to retire and have everything locked up, this is the first question to ask.

72(t) is an option, but it locks you in a bit and if it can be avoided, it should be (in my opinion).
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