Want Or Need To Retire Early? Tips On How To Pay For It.

Want Or Need To Retire Early? Tips On How To Pay For It.

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  • Bridge income. To support yourself in early retirement, you may need to tap into your assets sooner than planned – essentially bridging the gap until your other expected retirement income sources kick in. Fortunately there are ways to do that without incurring penalties for early withdrawal. For example, if you retire before you’re eligible for Social Security and Medicare, you can withdraw money from your traditional IRA before age 59½ without paying the 10 percent penalty. That’s because of something called the 72(t) provision. Similarly, the Rule of 55 allows you to withdraw money from your 401(k) or 403(b) without penalty if you are between ages 55 and 59½  and have been fired, laid off, or quit your job. (This applies only to the retirement plan sponsored by your most recent employer, not an older plan from a previous employer. Also, while you avoid penalties with these strategies, you still have to pay taxes on those withdrawals.)
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