Things to Consider When Retiring Early

If you’re in the fortune position to be considering the idea of retiring early. What are some of those questions or ideas that you need to be contemplating as far as what to do when retiring early. So first off it might be you know when or how are you going to draw from your retirement account? So when you have an IRA, it’s at age 59.5 where there’s no longer any penalties. But if you were to draw out income prior to 59.5 then the IRS has a 10% early withdrawal penalty. Now one of the ways around that is Rule 72T and I won’t dive too deep into that right now, but it’s a way to generate a consistent income stream and avoid that 10% penalty. Or perhaps it’s drawing from your 401K after age 55 where you can access that money and again avoid a 10% penalty. But that’s another question of is it our IRAs, 401Ks, are they going to be really the best place to draw your income when it comes to maybe the different tax purposes of what impact that’s going to have or maybe what impact would it have for you on potential health insurance subsidies. So there’s different ways that you can draw income whether it shows up on the tax return or if it comes from an after-tax savings or brokerage account that wouldn’t show up on the tax return and what impact that would ultimately have on you. One of the other areas when considering to retire early, what about Social Security? Is that going to be a big piece of your overall retirement income stream and if so, when are you going to start that? Are you going to draw it at age 62 or are you going to defer that out to your full retirement age or wait until age 70? Those are all decisions to be considering. And along with that if you stop working then obviously your benefits are going to be reduced because you’re no longer paying into Social Security. What about your health insurance plan? Do you have from your employer, is that something that they offer as part of your retirement package? Or ultimately does your insurance benefits stop at that point? So there’s a variety of plans. There’s a variety of ranges of costs that you have to consider when looking at health insurance. Also, what are your plans if you do retire early? Do you have certain hobbies or things that you look forward to doing? I’ve come across so many folks where they get to retirement and they’re so thrilled, but then they’re trying to think of okay, what is this next chapter of my life look like? So again, if you’re contemplating retiring early and not sure on some of the numbers, we’d love the opportunity to sit down with you and talk with you further.