Are you gearing up for early retirement? If so, there are quite a few early retirement options to choose from depending on your unique financial situation. Inside Your IRA’s got you covered with the options that get you to early retirement.
Early Retirement Options You Can Take Advantage Of Now
1. But First, How Do You Retire Early
Early retirement is not an impossible goal as long as you start saving early and work towards meeting these savings milestones. This article will help you learn about the basics of saving for early retirement including how to calculate a savings rate, what ratio of savings to income will help you retire earlier and tips on meeting your savings targets.
2. 401(k) Early Retirement Guide
One of the best tools for retirement at your disposal is your 401(k). In this essential article, you’ll learn about what ways you can take advantage of your 401(k) like 401(k) loans and early withdrawals. Also, you’ll learn about the complexities posed by income taxes on early withdrawals.
3. Social Security Early Retirement
There are many retirement savings plans you can consider tapping into when it’s time for early retirement. If you dip into your Social Security benefits earlier, you’ll lose around 33% to 66% of the value if you defer using it until you’re 70. By using another retirement savings option, in this case, your IRA, will help you retire earlier maybe a better prospect by converting into a Roth IRA for lower taxes. Learn about this retirement strategy here.
4. Federal Early Retirement Rules
Working for government agencies has its perks and one of them are saving plans like the Federal Employees Retirement System or FERS. There are also instances where agencies allow their employees to elect for an early retirement especially if the branch of government is restructuring or moving offices.
5. Traditional IRA for Early Retirement
When you’re expecting to move towards a lower income bracket by the time you retire, perhaps the Traditional IRA is your go-to option for a savings plan. Learn about all the rules and contribution limits and how you can make use of the traditional IRA for early retirement.
6. How You Can Use A Nondeductible IRA for Early Retirement
A Nondeductible IRA is for those whose incomes don’t fit into the income requirements set by the IRS. There are penalties if the pensioner doesn’t withdraw by age 70 1/2 and before 59 1/2. With these limits in place, looking into using the fund for early retirement can be entertained as an option for early retirement. In addition, you cannot deduct these contributions come tax time.
A deductible IRA is more advantageous, but if you don’t qualify for that, it’s good to explore the other options you have for retirement savings.
7. Why a Roth IRA Can Be a Good Plan for Early Retirement
Roth IRAs offer tax-free paydays and can serve well for early retirement needs. There are built-in options for penalty-free early withdrawals if the need is justified and within five years of opening the account.
8. Inherited IRA for Early Retirement
Did you get an Inherited IRA from a loved one? The rules say you must make withdrawals 5 years after the original pensioner has passed. In case, you land an Inherited IRA; it’s time to check if you can use it to fund your early retirement.
9. Simplified Employee Pension(SEP) IRA
Does your company offer a SEP IRA? Since it’s your company contributing to your savings, it’s worth noting how you can take advantage of this plan and when early withdrawals are allowed.
10. Savings Incentive Match Plan for Employees (SIMPLE) IRA
A SIMPLE IRA allows withdrawals any time as long as the need is qualified. This particular feature may be of help when you retire early.
We hope you’ve learned a thing or two about how to apply for early retirement using savings plans and financial instruments. Although working towards your savings goals can be hard, your future self will thank you for all your hard work.
Do you have your own ideas or questions about how to apply for early retirement? Comment down below.