![]() Planning to retire at 55 is different from planning to retire at 65 or older for. How Much Money Do I Need to Retire at 55? An annuity is something you might consider if you want a backup source of income until you’re eligible to withdraw money from qualified accounts or claim Social Security benefits. This allows you to collect regular monthly payments later beginning at a date you choose. This type of insurance contract allows you to pay a premium to the insurer. You could also supplement a brokerage account with regular savings accounts, money market accounts, cash value life insurance or an annuity.Īnnuities can provide a steady stream of income in early retirement. But remember that selling investments at a profit can trigger capital gains tax. An online brokerage account could be a good place to start. This means you’ll need to have savings and investments outside of these plans you can tap. Otherwise, you’ll need to wait until age 59.5 to withdraw earnings without a penalty unless you qualify for an exception. But to do that, the account must have been open for at least five years beforehand. With a Roth IRA, you can always withdraw your original contributions tax- and penalty-free. If you have a traditional IRA, you generally can’t take money out of it before age 59.5 without a penalty unless you qualify for certain exceptions. The only way to work around this would be rolling your old 401(k) or 403(b) into your current one before you retire. But you still wouldn’t be able to tap any money in 401(k) plans you had at former employers without a penalty before age 59.5. This IRS rule says that if you get fired, laid off or quit your job in the year that you turn 55 you can withdraw money from your current 401(k) or 403(b) without a penalty. But you may run into a snag when trying to take money from those accounts before age 59.5.įirst, there’s the Rule of 55. Saving money in a 401(k) or individual retirement account can help to fund your early retirement goals. Can I Retire at 55 and Take Money From My 401(k) or IRA? And that if you decide to take those benefits as soon as you’re able to, they’ll be less than what you’d get if you waited until full retirement age instead. So if you’re asking, can I retire at 55? it’s important to know that you won’t have Social Security as a source of income for a few years. If you wait until age 70 to take Social Security, for example, you can receive a monthly payment that’s equal to 132% of your regular benefit amount. The flip side to Social Security is that you can be rewarded with a larger benefit amount by waiting to claim them. ![]() Once you turn 62, you could claim Social Security retirement benefits but your earnings from consulting work could affect how much you collect. So, say you retire at 55 from your full-time job but you want to do some consulting work on the side. Your benefits can also be reduced if you start taking them at age 62 but are still working in some capacity. Taking Social Security benefits prior to reaching your normal retirement age results in a reduction of your benefit amount. The earliest age you can begin drawing Social Security retirement benefits is 62. However, you unfortunately cannot begin receiving Social Security retirement benefits at 55. These benefits are designed to provide monthly income in addition to any income you have from qualified retirement accounts, taxable investment accounts, annuities or other sources. Social Security retirement benefits can be an important part of your financial puzzle. Can I Retire at 55 and Collect Social Security? And some seniors may choose to delay retirement to their 70s or simply keep working indefinitely. If you’re going by the normal retirement age prescribed by Social Security, for example, that usually means waiting until you’re 66 or 67. So it’s perfectly legal and possible to retire in your mid-50s if that’s your goal.īut it’s important to keep in mind that retiring at 55 isn’t the norm for most people. In fact, some members of the FIRE (financial independence, retire early) movement aim to retire as early as 40. There’s nothing in the retirement rulebook, legal or otherwise, that says you can’t retire at 55 years old.
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