I retired at age 55 in April 2022. What I have found as the determining factor is your monthly expenses and debt. A paid off house and zero debt combined with low monthly expenses makes retirement doable. My monthly expenses average $1650/month. I've reduced the expenses to 12 items. 1. Food 2. electric 3. natural gas 4. water/sewer 5. trash/recycle 6. internet 7. cell phone 8. Auto insurance 9. home insurance 10. property tax 11. gasoline 12. home/auto repairs. Entertainment spending is fairly low in my situation because i can find many free things to do and see for minimal cost.
I retired at 55 and 1 month. But carried my healthcare with me at the same price. If I knew how easy retirement was I would have left earlier. Get out whenever you can.
Just sharing my situation, I retired September 30, 2022 age 55 under a VERA/VSIP early retirement offer from the federal law enforcement agency where I worked. My retirement is called FERS. I’m very happy I did it, full pension and full health insurance forever. I was hired right out of college age 21 in 1988 and saved the maximum in my Thrift savings account 401K, I paid into Social Security and my annuity is based on my high three salary which was 160K. So basically a three (3) tier pension. The VSIP was a bonus of 25K and if I need money from the 401K under the rule of 55 I avoid the 10% IRS penalty. Wish you all the best and always remember, nobody ever regretted retiring early 🏆
Greg, your story is encouraging. Like you, I work for the feds and plan on retiring in December 2023 at 56 with 30 years of service. I have 7 figures in the TSP and will have a final salary of about $172k. While I know I should be ok financially, I am still nervous about retiring but your story allays some of my apprehension/anxiety. Thanks!
I did retire at 55,that was nine years ago. I’m an RN, and was fortunate that I worked at a public/teaching hospital-part of the state retirement system. The Regular Class retirement service guidelines at the time were :30 years regardless of age and 62 years of age with at least six years of credited service .The state pension system also offered an investment plan. However, there was also the DROP(deferred retirement option program )offered by my former of which I participated. It was eligible for those in the pension program who met the credited service requirements. An employee was then legally retired upon entering DROP ,and worked as a retired employee for their employer . 5years was the max time one was permitted to work in the DROP ,The 457B money was a nice bonus in to addition to the monthly pension the employee receives upon complete separation from the employer. The payouts of unused accrued time : sick,vacation,comp time extended illness time were a nice chunk of change.Consider myself very fortunate. Claimed Social Security at 62 providing me a dependent benefit ,for my youngest child .Retiring at 55 and claiming Social Security worked out very well for me.
Funny I did some of my best work from 55 to 65. Heh Heh. Now my body began falling apart, starting in the late 50s, but still it helped to keep working until later.
Thank you! Yes, the software (Right Capital, as you know) certainly has a lot of capabilities. Good to hear that you made a plan and it's going well for you.
@@ApproachFinancial yeah hard to believe once we got our minds right we will have gone from zero to retired in 34 months with over $500k saved. took 18 months of playing with RC to get it all worked out.
i m 57 and I think the business environment is forcing me to retire early. Most likely I will tackle my brokerage first, as to reach 60 or 62, when I plan on taking 401k out, as I delay my social security until 70. My wife is still working and being younger than me by a decade, she can still save on her side, while I spend mine.
My understanding is ACA is based off your last W2 and with that being said, if my last year before retirement I make say $150k then I'm going to pay through the nose for insurance but after that first year, my next W2 is going to be significantly smaller and that's when the ACA really makes sense. Please correct me if I'm wrong on that.
Good question, and I'd say the credit is based off the expected income for the year you want coverage (but not the prior year). It can include income beyond W2 wages, so that could also affect things. For some more info: www.healthcare.gov/income-and-household-information/income/ That said, things could still work out more or less the way you're hoping. At some point, your income drops, and then you can use a lower income for bigger credits.
Correction...The ACA is based off the year you get insurance under the ACA. The last W2 may be used as an estimate but what matters as far as the subsidy is how much you made the year you were on insurance under the ACA.
That is the big question for most people, and it's hard to know without having all of the details about somebody's situation. Even then, there are unknowns. Some of the videos below (and linked calculators) might help you get a better idea, but doing plenty of detailed financial planning is the best way to get a meaningful answer to that question. You can do that yourself, or you can get help from a financial planner, depending on your preferences. - Do you need $1 million (sometimes yes, sometimes no): th-cam.com/video/Xqdwj0L0lSk/w-d-xo.html - How much might you spend? th-cam.com/video/B8nUnTVbhEs/w-d-xo.html
I have 401k with my employer. I got laid off and I am 55 year old. Company is giving me 6 month of severance pay (paid Bi-weekly). Am I able to utilize the rule of 55 now or do I have to wait for 6 months (after my severance pay ends)?
My view is that you can use the rule if you officially terminated employment and you otherwise qualify (over 55). That said, I obviously don't know the details of your arrangement with the employer, so it would be best to check with the Plan Administrator to verify what your options are. So, a primary question at this point might be if you've officially terminated employment (or not).
@@ApproachFinancial I called and talked about the rule of 55 with my 401k plan administrator and the person I spoke to, told they will follow all rules of withdrawal and he was not aware of such a rule of 55 and not paying penalty. He stuck to the argument until 59.5 there will be a penalty. How do I make them realize this rule? Any pointers? If they do withhold such a penalty, is there a way to get it from IRS during tax filing as it is not applicable? Thanks.
That's a good question, and I think there are two things going on. One is a potential tax penalty, which hopefully won't apply if you satisfy all of the IRS requirements. The other is withholding, which may be required even if you qualify for a penalty-free withdrawal. The withholding would generally still apply if you're taking a cash distribution after you leave your job. That said, if they end up withholding more than you owe the IRS (based on everything else going on with your return), you can potentially get the excess back as a refund after filing your taxes. I would discuss the situation with your tax preparer before doing anything to make sure you know how things will unfold. Again, you probably can't do much about mandatory withholding, but you can possibly avoid the early distribution penalty when using the so-called "rule of 55."
@@ApproachFinancial Thanks for the clarification. I am good with the mandatory withholding, which I can get back after filing. If they withhold the penalty amount, say by mistake, is that amount also included as a withholding or that is withheld and shown as a separate amount? Is there a way to identify that they withheld a penalty also in addition to the mandatory withholding amount not just by the looking at the amount withheld but by any other means? Thank you.
I retired at age 55 in April 2022. What I have found as the determining factor is your monthly expenses and debt. A paid off house and zero debt combined with low monthly expenses makes retirement doable. My monthly expenses average $1650/month. I've reduced the expenses to 12 items. 1. Food 2. electric 3. natural gas 4. water/sewer 5. trash/recycle 6. internet 7. cell phone 8. Auto insurance 9. home insurance 10. property tax 11. gasoline 12. home/auto repairs. Entertainment spending is fairly low in my situation because i can find many free things to do and see for minimal cost.
You must have employer provided health insurance. I was self employed and retired at 51. Health insurance premiums were our top expense.
I retired at 55 and 1 month. But carried my healthcare with me at the same price. If I knew how easy retirement was I would have left earlier. Get out whenever you can.
Retired from USAF at age 47 years old. I have TRICARE for life and VA health insurance. Thank you, Lord!
You're welcome. It takes a bunch of taxpayers to cover your benefits
Retired at 56 (almost 57). I had one years severance. Medical until 65. Took SS at 62. I am now 63 close to 64 and all is well.
Just sharing my situation, I retired September 30, 2022 age 55 under a VERA/VSIP early retirement offer from the federal law enforcement agency where I worked. My retirement is called FERS. I’m very happy I did it, full pension and full health insurance forever. I was hired right out of college age 21 in 1988 and saved the maximum in my Thrift savings account 401K, I paid into Social Security and my annuity is based on my high three salary which was 160K. So basically a three (3) tier pension. The VSIP was a bonus of 25K and if I need money from the 401K under the rule of 55 I avoid the 10% IRS penalty. Wish you all the best and always remember, nobody ever regretted retiring early 🏆
Greg, your story is encouraging. Like you, I work for the feds and plan on retiring in December 2023 at 56 with 30 years of service. I have 7 figures in the TSP and will have a final salary of about $172k. While I know I should be ok financially, I am still nervous about retiring but your story allays some of my apprehension/anxiety. Thanks!
What will be your monthly benefit?
@@30-Year_Accountant what so be your monthly benefit?
I'm living 6 pack to 6 pack.
Congratulations on your retirement. I hope to get there soon.
I did retire at 55,that was nine years ago. I’m an RN, and was fortunate that I worked at a public/teaching hospital-part of the state retirement system. The Regular Class retirement service guidelines at the time were :30 years regardless of age and 62 years of age with at least six years of credited service .The state pension system also offered an investment plan. However, there was also the DROP(deferred retirement option program )offered by my former of which I participated. It was eligible for those in the pension program who met the credited service requirements. An employee was then legally retired upon entering DROP ,and worked as a retired employee for their employer . 5years was the max time one was permitted to work in the DROP ,The 457B money was a nice bonus in to addition to the monthly pension the employee receives upon complete separation from the employer. The payouts of unused accrued time : sick,vacation,comp time extended illness time were a nice chunk of change.Consider myself very fortunate. Claimed Social Security at 62 providing me a dependent benefit ,for my youngest child .Retiring at 55 and claiming Social Security worked out very well for me.
One of the best retire early videos on YT...
Thank you!
Good video, your voice and the way you talk reminds me so much of half life. The guy in the suite.
Thank you for watching! I'm not familiar with that, but now I'll have to keep an eye out.
Excellent content, Justin. Thank you!
Thank you, David-much appreciated!
@@ApproachFinancial 👌
Thanks, sound summary
Funny I did some of my best work from 55 to 65. Heh Heh. Now my body began falling apart, starting in the late 50s, but still it helped to keep working until later.
Thanks for your info.
Thanks for watching!
Great video!! We used the same software. we are retiring July 2023, under the rule of 55. Would have been much harder to figure out w/o the software.
Thank you! Yes, the software (Right Capital, as you know) certainly has a lot of capabilities. Good to hear that you made a plan and it's going well for you.
@@ApproachFinancial yeah hard to believe once we got our minds right we will have gone from zero to retired in 34 months with over $500k saved. took 18 months of playing with RC to get it all worked out.
i m 57 and I think the business environment is forcing me to retire early. Most likely I will tackle my brokerage first, as to reach 60 or 62, when I plan on taking 401k out, as I delay my social security until 70. My wife is still working and being younger than me by a decade, she can still save on her side, while I spend mine.
Thank you for explaining things to the public. You’re very kind to share your knowledge.😊
Thanks for watching!
Have you looked at the cost of cobra?
How is that a realistic option?
Why is that so high on your list?
re-watching this. Can you do a video about freelance with his/her own 401k ?
Love your advice! I am 53 and want to retire at 55. I would love to avail your services. How can I speak to you and schedule something?
Thank you for the kind words. To learn about hiring me, please visit ApproachFP.com. The Pricing page and the About page should both be helpful.
My understanding is ACA is based off your last W2 and with that being said, if my last year before retirement I make say $150k then I'm going to pay through the nose for insurance but after that first year, my next W2 is going to be significantly smaller and that's when the ACA really makes sense. Please correct me if I'm wrong on that.
Good question, and I'd say the credit is based off the expected income for the year you want coverage (but not the prior year). It can include income beyond W2 wages, so that could also affect things. For some more info: www.healthcare.gov/income-and-household-information/income/
That said, things could still work out more or less the way you're hoping. At some point, your income drops, and then you can use a lower income for bigger credits.
Correction...The ACA is based off the year you get insurance under the ACA. The last W2 may be used as an estimate but what matters as far as the subsidy is how much you made the year you were on insurance under the ACA.
Jest talk about 55 age retirement don’t go far a way 😂😂😂😂😂😂
#1 tip to retire early: Don't have any kids.
I would add minimalism and strict budgeting as tip #2 and #3
Save enough to pay for your retirement home currently $7000 per month
When you have 10 percent inflation and a 3 percent return the numbers change just a wee bit.
thank you! This is great!
Glad it was helpful!
I'm 58 and debt free with savings and money aside, can I retire at 62?
That is the big question for most people, and it's hard to know without having all of the details about somebody's situation. Even then, there are unknowns. Some of the videos below (and linked calculators) might help you get a better idea, but doing plenty of detailed financial planning is the best way to get a meaningful answer to that question. You can do that yourself, or you can get help from a financial planner, depending on your preferences.
- Do you need $1 million (sometimes yes, sometimes no): th-cam.com/video/Xqdwj0L0lSk/w-d-xo.html
- How much might you spend? th-cam.com/video/B8nUnTVbhEs/w-d-xo.html
I have 401k with my employer. I got laid off and I am 55 year old. Company is giving me 6 month of severance pay (paid Bi-weekly). Am I able to utilize the rule of 55 now or do I have to wait for 6 months (after my severance pay ends)?
My view is that you can use the rule if you officially terminated employment and you otherwise qualify (over 55). That said, I obviously don't know the details of your arrangement with the employer, so it would be best to check with the Plan Administrator to verify what your options are.
So, a primary question at this point might be if you've officially terminated employment (or not).
@@ApproachFinancial I am officially terminated.
@@ApproachFinancial I called and talked about the rule of 55 with my 401k plan administrator and the person I spoke to, told they will follow all rules of withdrawal and he was not aware of such a rule of 55 and not paying penalty. He stuck to the argument until 59.5 there will be a penalty. How do I make them realize this rule? Any pointers? If they do withhold such a penalty, is there a way to get it from IRS during tax filing as it is not applicable? Thanks.
That's a good question, and I think there are two things going on. One is a potential tax penalty, which hopefully won't apply if you satisfy all of the IRS requirements. The other is withholding, which may be required even if you qualify for a penalty-free withdrawal.
The withholding would generally still apply if you're taking a cash distribution after you leave your job. That said, if they end up withholding more than you owe the IRS (based on everything else going on with your return), you can potentially get the excess back as a refund after filing your taxes. I would discuss the situation with your tax preparer before doing anything to make sure you know how things will unfold.
Again, you probably can't do much about mandatory withholding, but you can possibly avoid the early distribution penalty when using the so-called "rule of 55."
@@ApproachFinancial Thanks for the clarification. I am good with the mandatory withholding, which I can get back after filing. If they withhold the penalty amount, say by mistake, is that amount also included as a withholding or that is withheld and shown as a separate amount? Is there a way to identify that they withheld a penalty also in addition to the mandatory withholding amount not just by the looking at the amount withheld but by any other means? Thank you.