So, you’re aiming for early retirement? Great. That makes two of us, but as you likely already know, it’s a lot easier to dream about than to actually achieve.
Let’s assume you’ve done the hard work and built yourself a solid retirement savings account. Well done!
The only issue now is you can’t touch any of those funds before age 59½ without facing a 10% early withdrawal penalty.
So much for retiring early, right?
Not necessarily—there’s still hope for accessing your savings before the official retirement age without getting hit by that penalty. Here’s how it works.
If you’re confident you’ve saved enough to comfortably support yourself throughout retirement, then it’s time to move on to phase two.
The challenge now is figuring out how to access those savings without triggering the 10% penalty.
Thankfully, there are a few penalty-free options available to you. Some of these exceptions include cases of death, disability, education expenses, or making a first-time home purchase.
But if none of those apply to you, don’t worry.
You can still tap into an employer-funded 401(k) penalty-free if you’ve reached the magic age of 55 or older.
Many early retirees use this strategy as a way to create a bridge income until they can access their primary retirement savings without fees.
It’s definitely not worth paying the 10% penalty for early withdrawal from your retirement savings. At the same time, the thought of another day at the office might feel just as punishing…
Either way, it’s helpful to know the free withdrawal options available to you.
Even if you don’t qualify under the exceptions for disability, education, or a first-time home purchase, you can still pull from your 401(k) as long as you’re at least 55 years old.
While these funds may not be enough to sustain you throughout your entire retirement, they can help bring that long-awaited retirement date closer.
If you’re tired of waiting and ready to speed things up, these simple strategies can help you stay afloat until you’re eligible to access the rest of your savings without penalties.
