Thinking about retiring early. I'm 58, married and 9 years older than my wife who will continue to work.  We use her health insurance.  

Changed jobs recently so my old 401K is just sitting there. Over 50 rule applies to me according to Fidelity who the account is with, so I'm not going to move the money to new employer account.

My knowledge when it comes to this is pretty limited. Im told I can start drawing from my old 401K at any time without penalty.  Is that what people do?  My investments choices are still fairly aggressive so I've seen big gains last few months. I'm thinking now may be a good time to move investments to bonds or lower risk choices.

Fidelity would love to sell me their services as they are holding the money. Is this a smart move or are there better choices in a financial advisor?  I don't mind paying for services.

I know I can't draw SS till 62 but not having that $2100/mo won't prevent me from retiring now.

Kids' college funds will pay for their college and my wife has her own employer 401K with similar balance as well as a full pension from Aerospace firm she works for.  

I just bit the bullet.  Find a Fiduciary that you pay directly so that there is no conflict of interest, not a guy who charges a % of your total money.  
Fidelity is great, but their people just want to have your money under their control.  

Given you wife is younger and will be working longer than you there are likely a lot of tax advantages you could capitalize on that would easily pay for a year or two of quality advice.

That's kind of what I'm thinking. Where would I find a good investment/retirement planner?  My credit union sent me to some knuckleheads who wanted me to invest in loaded mutual funds and tax deferred annuities.

2 main rules for the 501K. Thes are IRS rules.

The 59 1/2 rule and rule of 55 when it comes to 401K plan. The rule of 55 does not apply to IRA plans like the rule of 59 1/2.

If you are 59 1/2 you can withdraw from your 401k penalty free.

Rule of 55: if you leave your CURRENT employer anytime in the year you reach 55 or older you can take withdrawals penalty free. Key is it has to be your current employer and their plan has to allow for it.

Not sure what you are referring to when you say rule of 50. I’m thinking you mean the rule of 55.

Most people who want to use the rule of 55 move any prior 401K money or pre-tax IRA money into their current employer plan. That way they have a larger amount to draw from. Of course your plan has to allow that.

If you have any fidelity 401k type plans you can already access their basic retirement calculator. You really need to run a Monte Carlo analysis. Things like sequence of return risk can absolutely destroy your financial plan in retirement. The last thing you want to do is have to go back to work in your 80s because you ran out of money, and end up living with your kids.

Personally, I don’t think the cost of a financial advisor is worth it. Many won’t be interested unless you are the doctor/lawyer/business owner type. All the stuff they do is easily learned and applied to your own situation.

I just searched online for “fiduciary advisor in Huntsville, AL” and found a guy local to me who is an engineer that got bored of engineering (like me) and became a money guy and his office is next door to my daughter’s climbing gym.  He is part of a company in MI that has people all over the country who are sort of like franchises, they heavily market their people as remote advisors and the advisors also pursue local clients.  

Met the guy last week and he seems like my brother from another mother.  He has different fee schedules depending on the level of work he is doing, my local guy charges $2-5k per year.  Their advisors set their own fee schedules.  He will manage accounts for you if you want him to for a percentage fee, my local guy didn’t push that and even said he offers it only because some people want it.  

The main thing that incentivized me to make the jump was tax planning - I’m at a point where our finances are complex enough that I don’t have the time to find the best answer for everything and I feel confident a smart guy will be able to save me more in taxes than what he charges.  I agreed to one year to see how it goes.  

If it helps, the guy I found is part of this company: https://forfiduciary.com/.  

OP,,You seem to have enough going on that being able to get "materials" from your broker to your accountant WILL be paramount. I'm 70 and have been with UBS for over forty years. There's NO way we would switch now just because of tax return issues. Look WAY down the road before you make a switch as you'll likely be "stuck" with your decision going forward. One of the ways we have saved some money is to have dual accounts. One with UBS and the other a "mirror" account with a discount broker that is NOT full service. Seems to work for us as we've been retired for almost twenty years now with no issues. We do NOT hold any "unusual" investments in the mirror account. MLPs are one area where we NEED our accounts help to file due to the nature of the investment.

@Morgan321

Thanks for sharing this, it seems legit recs for these kind of services are rare or buried under mountains of fake recs.

How does account access work? Do you have to give them authority to your accounts? If they were compromised you could pull the plug on their access, correct?

Article on Rule of 55:  https://www.schwab.com/learn/story/retiring-early-5-key-points-about-rule-55

DIY planning guidance:  
https://www.amazon.com/Bogleheads-Guide-Retirement-Planning/dp/0470455578

It would likely be valuable for you to find a financial advisor for your first year or two, to help you plan your tax strategy, asset allocation, distribution plan, especially since it sounds like you are starting from scratch.

Find a CFP at a Registered Investment Advisor (RIA) or trust company. One that is fee-only (not “fee based”). They will be required to act as your fiduciary. An advisor at a bank, insurance company, or brokerage isn’t a usually full-time fiduciary.

Have them prepare a retirement analysis with you. BTW, some of the advice given in this thread about 401k rules is inaccurate. Talk to a professional.

A few risks that stand out:

1. In nearly 30 years of doing this I’ve never seen a staggered retirement go full-term. If one spouse retires and the other plans to work 2 more years, expect 1. 8 years more? Expect 4. Have your advisor prepare retirement scenarios that test what is feasible should plan A turn into plan B or C.

2. Very few people can afford to retire that early because the gap between retirement and social security is huge. Your 50s are your peak earning/saving years and it’s worth your time to look at a comparative analysis of early vs normal so you can see the difference in risk.

Yes, like too many other things I found it difficult to separate fact from fiction online due to sheer volume(much of it garbage).  So I intentionally avoided reading reviews and simply searched for a local person who I could look in the eye.  
I think their model of individuals doing local work and the "franchise" providing remote business is a good idea - financial planning can easily be done remotely if you trust the guy giving you the advice.  

I'm not having them manage anything for me, but https://forfiduciary.com/who says they use fidelity, schwab, and td ameritrade.  So I assume they setup whatever type of account(s) you need and have access to them (presumably in addition to you?).  

I found my guy from his own company's website which says he is now part of the above-linked larger company.  
Andy charges $2-5k/year depending on the complexity of your situation and 0.35% of any money he manages for you.  Based on my research his fees are about average and his management fee seems below average.  He straight up told me that the management fee is a great deal for him and that he would recommend against it for anybody who currently does their own trading unless you simply don't want to do it yourself.

I'm a newby at this, but so far Andy is great based on a phone call or two and meeting him once.  If you're in the city there's got to be tons of local advisors to choose from?  If you live somewhere with a high cost of living, perhaps remote advising can save you money by letting you use an advisor who lives in a lower cost of living area and thus has lower fees?  

Perfect timing OP, I am 59 and plan to retire by year end. Wife is 57 with decent job, insurance available.
I currently have over $1M inheritance in probate court since my Dad died recently, I am only child.
Around $500K of my own.

ETA: Very low cost of living here.

With an uninvested "lump sum" from an inheritance and retirement right around the corner, this poses a very large risk depending on how much you need/plan to draw from the account, due to sequence of returns risk.  It is good to educate yourself on that, as well as proper asset allocation for retirement years that meets your drawdown and risk goals.

Sorry about your father.  

Wife will still make $50K and I have my own savings plus mutual funds and an IRA I inherited from my Mom with mandatory distribution.
So I won't need to withdraw from Dad's inheritance other than a $50K IRA with mandatory distribution.

Dad was 90 and lived alone on his farm until 1 week from the end like he wanted. No nursing home.

This is good info.  Thanks. To clarify, yes, I meant to say rule of 55. I was laid off last year when I was 57 from job I held for 10+ years. ALL of my 401K investments were in my (then) employers (Fidelity) 401K plan.

When Fidelity received notice from my employer about being laid off, they called me to discuss options and upon hearing I may want to retire early, they educated me about rule of 55 and if I move all the money from the existing account to new employers account, it would impact my ability to remove money tax free, at least until I turn 59 1/2 in January of 2025. As a result, I left the money where it was and started a new 401K with my new employer.

Fidelity does have some good calculators and modeling tools. There is a model in there now they built for me, but includes some assumptions on wife's 401K balance her monthly pension, etc.  it also assumes me retiring at 60 and I probably won't wait that long.

My first step may be to set up a call with their advisor (it's free) and have him do a new model showing the accurate numbers  that we now have.

There are other, more complex variables such as two houses and two mortgages, our desire to sell one in 3 years and move.  Also, my medical issues and our relying on her very good medical insurance, etc. Aside from two, reasonable mortgages and a $225/mo truck payment, we have no other debt. No credit card balances, etc.

Part of my goal is to demonstrate to wife our ability to retire early from a financial standpoint. At the latest, that would be when we each turn 60.

You're not withdrawing money tax free, you're withdrawing it penalty free.  Traditional 401k will always be taxable, rule of 55 only avoids the penalty.  

I've used the Fidelity calculators, they are quite basic and make some broad assumptions.  I spent 2.5 hours at this advisor guy's office last week and he showed me various software they use for planning - it is much more detailed and has lots more capability than what I use at Fidelity.  

The wife aspect could be significant for some - I retired from the military last year and the wife has become lots more involved in finances now that I joke every day about how awesome it is that I can just quit my job at any time with zero notice.  Up until last year she knew that the credit card worked and the ATM spit out cash.  I think she now finally believes me when I say I'm not working another decade or two and has taken notice.  She started recording every penny we spend to figure out what we can save money on.  The money guy will be independent confirmation that I'm not going to work another decade or two and it will help her better understand now that she is more interested in our finances.


This is another reason I made the jump into an advisor.  My mom died last year and left behind some money (nowhere near $1m!) and I will get it all on my 2024 taxes - about 1/3 of it is taxable.  

I have a decent amount of cash in my taxable brokerage account and this mom money will add quite a bit to it - that's a big pile of taxable cash to invest with major tax considerations this year and also in years to come.
I'm happy to pay $3k for a year of advice from a guy who is way smarter and more experienced than me in investing and avoiding taxes.

Either they misinformed you, or possibly you misunderstood some things, or the timing of their advice was before things changed.

There are no tax-free withdrawals from your 401k, unless those are from Roth 401k.  The rule of 55 simply avoids the 10% early withdrawal penalty.

Second, it is very odd that they advised you to leave the 401k money in your old 401k as opposed to moving it to your new employer's 401k plan.  Because the rule of 55 would be just as valid for all money in the 401k at your NEW employer when you "retire" from them.  Unless somehow the new 401k plan does not allow for partial distributions, but the old plan does.

Third, it is my understanding that the rule of 55 only applies to your CURRENT employers 401k, which is why it is often advised to transfer all assets/funds to your new 401k if you are planning on leaving that job and leveraging the rule of 55.  Had you started taking distributions from the 401k and THEN get re-employed - that is a different story and that is allowed to continue as long as distributions began before you started contributing to a new plan.

Perhaps the advice came from Fidelity before you had found a new job and began contributing to the new plan?

I'd seek some more advice and not from Fidelity.

Why is 1/3 taxable?

I got $250K in mutual funds and an IRA from my Mom in 2017, there was no income tax other than the small required IRA distribution I had to do.

The $1M value land I will get my cost basis will be value at time of death which is why I got an appraisal.
If I sell for the appraised amount there won't be any capital gains tax.

Sorry, I was in a rush typing my response and meant to say that rule of 55 allows me to remove money penalty free, not tax free. I understand I still have to pay taxes on what I withdraw, no matter when that is.

Fidelity's advice on moving money occurred before I got a new job. However, I DO remember them saying that closing the Fidelity account and doing a complete rollover to new plan once I found a new job DID have risk associated with rule of 55 and my flexibility.  They may have been blowing smoke up my ass.

go here and do some reading, Bogleheads is a good source of info

Mom had an annuity that was purchased with post-tax money so the earnings are taxable, a pre-tax retirement account, paper savings bonds, some cash in the bank, etc.  
Posted a couple questions here to educate myself about some of the things.  

Did you have to liquidate them?
If so the tax due would have been on the estate not your personal income tax.
That is my current situation, all income and bills go into out are paid out of estate cash.

Threads already here about them.  They are not part of her estate because me and my siblings were beneficiaries of the accounts.  

The annuity was by far the largest, it is one of those guaranteed annuities where it never loses money but the returns are capped at 3.5%.  I'm not keeping anything that returns only 0-3.5%!  
The 401k has RMDs, isn't very large, and is at a "shady" institution so I'm taking it all out.  
The paper bonds are paying 4.4% now and bond rates will decrease this summer - not super interested in 4.4% returns either.  

All together the taxable income is about $80k.  Given the crappy investments those things are in I'm not worried about some of the money being in the 24% bracket this year vs 22% if I do 1/2 now and 1/2 in 2025.  
Plus the income tax rates are going up in 2026 so I'm not sitting on shitty investments until then!

Thanks for the link. I read through their website and like what I see. I think I'll contact them.  Wife and I have separate 401K's that are about equal and combined are in the $2-$5M range so it seems prudent. Like I said in my OP, I don't mind paying for services but want to ensure the advisor is looking out for our interests, so a broker is not what I want.

2-5M

1.  That's a hell of a "range"
2.  With that level of assets, you need to vet your advisor seriously, and not just go with the "low cost" approach.  These can be critical years for tax planning and you want to start right now.

I have met Andy with Tenon and he is someone I would seriously consider were I in a position to need a fee-only fiduciary with published flat fixed fee schedule:
https://tenonfinancial.com/services-and-fees

Once your managed assets are well beyond $1m an AUM advisor structure just doesn't make sense to me, without serious discounting.

Andy has a great Podcast series for self-education:  https://retirementplanningeducation.com/podcast

And facebook group:  https://www.facebook.com/groups/retirementplanningeducation

Disclaimer, I dont use him or have any relationship with him, I've just been consuming his content and he has joined a financial foum call I am a member of, and continues to impress me.

I looked at a few of their other advisors, they seem to vary a lot.  One guy charged 0.95% management fee!  
If you aren’t in a major rush I’ll report back after an initial few meetings with Andy.

1% to 1.5% is a very common management fee for AUM advisors.

Andy charges 0.35%.

But you’d be paying his flat fee in addition to that 0.35%.

Does Andy include full tax planning?  Is he an expert and has experience with all aspects of Social Security planning, Medicare, IRMAA, optimized income control and Roth conversions, etc?  Does he track and manage tax loss harvesting options?  Does he limit the number of hours or sessions with a client?  Are his fees and AUM fee temporary as he tries to build a book of business, and expected to grow toward industry standards?

Those are the questions....  it isn't all how cheap someone is on fees, to me.

I wasn't trying to be coy. I just selected that from their published range on Forfiduciary.com.  They ask what range your assets fall in and our combined 401K's and cash savings (IRA's, etc) are over $2M but below $5M. That's the box I checked to move to the next screen.  Presumably, they have a different fee structure as asset levels go up.

I'll take a closer look at all of this, but I agree that I want a fiduciary and not a broker selling me what makes him the most commission.

I take it Forfiduciary is an AUM, which is not something you recommend for assets over $1M?

A CFP/FA can use either, and they all have reasons for choosing their fee model.  It is more important to understand the breadth of what they cover, their experience and expertise, then compare the net annual fees.  I don't think AUM is bad, but it comes down to the percentage discount as portfolios grow.

He does most (maybe all?) of that.  
Again, he charges a flat fee of $2-5k/year depending on the complexity of your situation.  If you want him to also manage your money it’s 0.35% in addition to the flat fee.  

I briefly perused the page of a couple other advisors and only saw one other with his fees posted and he was 0.95% but had no flat fees listed.  To reiterate, all the guys at that company are individuals who operate differently, charge differently, and take different types of clients. I can only speak for Andy since I found him on my own and didn’t go through the big company first.  

Again, I’ll report back in a few weeks once I get things moving and have something to report.

Started with some early episodes, great refresher course on things I've picked up here and there. Thank you.

OP here. No new info but I want to thank all of you for the incredibly helpful advice. Much appreciated.

My wife and I are a bit geeky when it comes to this and don't have much knowledge. For example when the topic of AUM came up, I had to Google it.

I have some health issues that are driving me to begin making arrangements now. If we do nothing, my wife and children will be fine financially.  We both contributed the max to our 401K's for over 25 years. That's simple to do and required nothing from us other than upping the contributions as allowed.  

What we have NO experience with is how to prepare for early retirements or the rules and laws to maximize future potential for our children. I don't want to simply retire early and start withdrawing from my 401K if there are smarter options.  We have other assets we should consider, two homes in a trust, wife has inheritance and a pension, and we want to sell one house and buy another a few years from now, etc.

Simply put we need guidance on how to make smart decisions going forward.

Thanks again and I welcome additional input.