Early Retirement: Key Steps to Secure Your Financial Future Before 60

There comes a point in your career when you think, "I’m ready to retire." For those younger than 60, this might be a harder-than-expected process. For example, to avoid early penalties from your retirement account, you must be over the age of 59 ½. Let’s take a look at some of the top ways to retire early.

Federal employees are a prime example of being able to retire early. If you have 20 years of service by age 50 or 25 years at any age, you can trigger your pension. Since federal employees also get to contribute to a Thrift Savings Plan, it’s important to understand that there might be additional penalties for withdrawing before 59 ½.
If you are an everyday private citizen, you still have options. Many people don’t know about the Rule of 55. This is where individuals who leave their employer or are fired in the calendar year they turn 55 can take distributions without an early withdrawal penalty from the employer's 401k. Rollover IRAs would not be eligible, and public safety employees can do this as soon as they turn 50.

In retirement, there are cases where you want to keep busy. Washington teachers, if they qualify for their pension, can collect it and continue to work part-time until 2025. In some cases, nurses can as well, until 2026.

If none of these are options for you, starting a brokerage account younger or funding a high-yield savings account to bridge the gap in income until retirement might be the best option for you. These accounts have lower or, in some cases, no taxation based on your income.

Now that you have a plan, it should be as easy as starting to take those withdrawals, but in reality, depending on the funding source, you might be restricted or subject to additional taxation. I help people understand the tax implications and work towards a plan that best fits their needs and wants. Let’s talk about your goals for retirement and investment strategy.
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Reference
1. Retiring Early? 5 Key Points about the Rule of 55
2. New benefits for some retirees, including return to work rules

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