- Joined
- Feb 25, 2021
- Messages
- 3,138
Bruce,Not trying to "kick you out the door" into retirement early, but I was advised that if you are truly retired, you can touch your 401K starting at age 55 without the 10% penalty. Something about taking out substantially equal amounts based on life expectancy. If your job stinks, you may check into it. I waited until I was 62+ to retire; didn't hate what I did, worked with good people. It was getting harder and harder to get up at 5:30 AM though, glad I retired!
Bruce
The quick version is that I retired in 2019, moved from Georgia to Indiana, and a whole host of other 'stuff'.
The long detailed story: Yes, you can take "substantially equal payments" over 5 years from a 401k if you start before 59 1/2. But I was in a university job that made me eligible for a 457(b), and some other IRS stuff. I was diagnosed with prostate cancer in 2017, and spent 2018 getting treated. I officially retired mid 2019 after burning about 2000 hours of sick leave during treatment, etc. I had over 30 years so was eligible by university rule. My money was not in a 401k but rather a 403(b) and 457(b) IIRC. Those were managed plans with limited investing options, BUT the IRS allows you to retire from those at 55 1/2. At retirement I could role money out of those 403/457 for 6 months (?), or it would be locked into those plans, run by AIG Valic, which in my opinion does not have a great reputation, and TIAA/CREF. I preferred to move my money into a rollover IRA through Schwab allowing me to invest much more broadly, have a lot more control over my money, etc, but could not be accessed until 59 1/2 except under the 5 year substantially equal payment clause. Rather than using that clause, I left enough money in the 457/403 to provide an income until 59 1/2. To build the new shop I actually cashed some, but not all of the 457/403 money out, although much of the shop was paid by the last of some money I had from previous property. So currently I'm living on slightly less monthly allotment than I planned, which means I can't quite finish out some of the details of the shop as fast as I'd like. But I'm retired, not hurting financially, I'm having fun, and my wife and I are happy. Sorry if that is more than you wanted to know!!!
I do appreciate the thought/suggestion. I enjoyed my job, but after some tough career decisions (that would be a long but dull novel), I was also tired of living in Atlanta, a 4 hours drive from my wife and farm/horses. Retirement is good. I had planned to work until 59 1/2, and would have had the money to build a nicer retirement home than the manufactured home we ended up in, but with the unknowns caused by aggressive/advanced cancer, it was time.
Last edited: