Originally Posted By Morgan321:
I don't want to work until I'm old only to die the week after retiring with millions of dollars in my mattress.

Originally Posted By jaqufrost:
I'm targeting 55, when the rule of 55 should open my 401k funds up for distribution. After that, I'll only keep working if I really want to be at work every day.

One of the benefits to early retirement is a bigger Roth conversion window. Why work longer to pay the government more at RMD time?

Originally Posted By Joe_Blacke:


Have you verified with your plan, what you are allowed to do with the rule of 55?

While the IRS allows it, not every plan does.  The plans that do, usually have stipulations like:  Distribution limits (either you get a specific percentage or a complete distribution), as well as ordering rules (you often don't get to specify which portion of your 401K you get to withdraw from if you have both pre-tax and Roth).  Most importantly if you take out any Roth before 59.5 you don't pay a penalty but DO have to pay taxes on any earnings.  There is also a mandatory 20% tax withholding using the rule of 55 since this falls under the IRS distribution rules for money going directly to you before 59.5.

My company's plan allows for it, but their ordering rules suck.  Their ordering rules require Roth distributions before any pre-tax (including company match), and I don't want to have my Roth taxed at all.  Thankfully with my plan it does track sources independently and I have confirmed that I can rollout just the Roth buckets into my Roth IRA's leaving just the pretax $$ sitting in my 401K.  Having the 20% mandatory withholding for taxes will suck, but I will get it back when I file my year end return.  I'm only going to take out the equivalent of the standard deduction from the 401K, and then layer brokerage up to the 0% capital gains limit, and Roth IRA withdrawals on top to get the spending I want.  Once I hit 59.5, then the remaining 401K balance gets rolled into an IRA.

BTW, early retirement often greatly reduces any need for Roth conversions.

Originally Posted By Wandell:

Kids make sure you opt in to your company's long term disability insurance, its worth every penny.

GREAT ADVICE! i WAS NOT EVEN CONSIDERING RETIREMENT AT 56 but developed a large brain anneurysm that caused me to have a stroke. i took my ass back to work for twoyears but the new liberal yankee police chief stabbed me in the back and suspended my ass after 35 years. while out on admin leave, I was told i should retire, which i did in july of 2025. i honestly dont miss the job or the people as a ton f my fellow officers quit or were also run off in 2025. when the new chief took over, he told a couple of officers  i'm tired of these good ole white boys! 'im a minority and thats what im gonna hire and he's been true tohis word about that but karma will bite his sorry ass one day. as for disabality insurance I've seen several people with our city get disabled and we don't have a disabality retirement. now i'm sitting around waiting on socurity to approve my application.

Originally Posted By jaqufrost:
I've looked through the handbook and haven't found it so far. I've got a bit over 10 years before 55, so I've got some time to iron out the details. I've considered swapping jobs for a year or two and rolling my 401k if I get confirmation the plan doesn't allow for rule of 55 withdrawals. Alternatively I could do 72t withdrawals.

Originally Posted By Joe_Blacke:
I know exactly when I'm going to retire.  I've been planning it for quite a while.  

I'm at the point where I just don't want to spend the majority of my day doing what other people want me to do.  I want to be able to do whatever I want from when I wake up until I go to bed.  If I stayed 3 years beyond my planned date, I would get company retirement healthcare and a much better pension payout, but I don't care.  

Part of the problem is my leadership.  They suck.  They are the type of people who create the most toxic environment possible, as my director is a certifiable psychopath as is one of the managers under him that I have to interact with often.  Unfortunately, there is NO way to replace my income anywhere else.  I have the proverbial golden handcuffs.  I'm way overpaid, plus a 100% company funded pension and decent bonuses and 401K matching.  My job itself isn't the problem, just the leadership that has really sucked all the joy out of working.  I think the only thing keeping me from becoming depressed is knowing exactly my exit and strategy.

The first payday of March, 2031 I will get my last bonus and I am gone.  I've already computed how much of a SS hit I will take (not much thanks to indexing and bend points), how to optimize my 401K withdrawals using rule of 55 (our plan has ordering rules that would make Roth withdrawals come out first which makes them taxable) till I hit 59.5, and layering brokerage/Roth for 0 taxes, sequence of return risk, asset location, health care, SS filing optimization, widow tax traps, IRMAA and SS Tax torpedo, estate planning, and most importantly, ensuring I never have to work again unless I want to.

Thanks to long term planning, I will easily spend more than what I earn now and still be in the 0% tax bracket.  Health care will be cheaper than what it costs me now with an ACA silver plan and subsidies.  My youngest will just have gotten out of school, and my wife and I are already planning our travel.

I am literally counting the days.   Telling them "I'm out" will be the biggest benefit.

Originally Posted By VegasEggus:


I didn't realize my old Director was still working.
All I can say is 5 more years is a LONG time working for someone like that.

Originally Posted By Joe_Blacke:
I know exactly when I'm going to retire.  I've been planning it for quite a while.  

I'm at the point where I just don't want to spend the majority of my day doing what other people want me to do.  I want to be able to do whatever I want from when I wake up until I go to bed.  If I stayed 3 years beyond my planned date, I would get company retirement healthcare and a much better pension payout, but I don't care.  

Part of the problem is my leadership.  They suck.  They are the type of people who create the most toxic environment possible, as my director is a certifiable psychopath as is one of the managers under him that I have to interact with often.  Unfortunately, there is NO way to replace my income anywhere else.  I have the proverbial golden handcuffs.  I'm way overpaid, plus a 100% company funded pension and decent bonuses and 401K matching.  My job itself isn't the problem, just the leadership that has really sucked all the joy out of working.  I think the only thing keeping me from becoming depressed is knowing exactly my exit and strategy.

The first payday of March, 2031 I will get my last bonus and I am gone.  I've already computed how much of a SS hit I will take (not much thanks to indexing and bend points), how to optimize my 401K withdrawals using rule of 55 (our plan has ordering rules that would make Roth withdrawals come out first which makes them taxable) till I hit 59.5, and layering brokerage/Roth for 0 taxes, sequence of return risk, asset location, health care, SS filing optimization, widow tax traps, IRMAA and SS Tax torpedo, estate planning, and most importantly, ensuring I never have to work again unless I want to.

Thanks to long term planning, I will easily spend more than what I earn now and still be in the 0% tax bracket.  Health care will be cheaper than what it costs me now with an ACA silver plan and subsidies.  My youngest will just have gotten out of school, and my wife and I are already planning our travel.

I am literally counting the days.   Telling them "I'm out" will be the biggest benefit.

Originally Posted By Joe_Blacke:
I’ve got enough to retire already. I would prefer my youngest to be done with high school. Also I’d like to hit 55 to use my pre-tax 401k rather than brokerage and Roth conversion ladders.

Originally Posted By FALARAK:

Why use pre-tax 401k in early retirement?

I always thought it was advantageous to use a taxable brokerage as a bridge account to live on, while you do your Roth conversions from pre-tax 401k?

Originally Posted By FALARAK:

5 years seems like an enormous time to deal with that.  It must be very manageable for you.

My first available "date" is this coming October.  I will see how I feel then.  But for certain, my retirement income at that point will only be about 50% of what I make now.  I cannot imagine actually spending what I make a year.  That would be amazing.

Originally Posted By Joe_Blacke:
It’s so strange that leadership attracts these type. Leaders who look at people just as objects.

Originally Posted By mclark202:
I retired at 44 years old but planned on retiring at 20 years since before I even became a cop.  That was one of the known benefits of the job is “20 and out”. Nobody ever tells you that the retirement thing is only if you planned and budgeted well though.  I got to 20 years before I knew it and wasn’t ready to go honestly. Life was pretty good and riots were dying down and unlimited easy overtime was plentiful. My retirement was based on my “high 3” so I was starting to have good years. I worked two more years and busted my ass to get my high 3 really high(for a basic cop not a supervisor role). Hell, I even turned down a promotion because I could make more working overtime.

So I was able to retire at 44 years old and took off a year and a half to enjoy it. Now a part time job fell in my lap that allows me to still police but on my schedule so I took it. 2 man department where I’m the part time guy that picks my hours and work pretty much as much as I want to. My retirement lump sum I took has grown almost $100k since retiring in two years so if that continues to grow I’ll have a lot of money to play with when I turn 60.  I also have a monthly pension for life so I live off that and the rest is icing on the cake.

Not bad for a 45 year old guy living the best life.

Originally Posted By Morgan321:
joe: 14% of your savings is “easily 7 figures” implies that you have well in excess of $7million saved at around 50 years old.  If that is the case then your situation is different from 99.9999% of Americans.  


This BETR thing from vanguard that is making the rounds is an oversimplification of one small part of retirement planning.  

I think it does a disservice to most people because it coerces them to narrow their field of view to scrutinize one tiny piece of the retirement puzzle to the detriment of the other pieces.  
To make matters worse, that question (does a Roth conversion make sense) is easily answered without the obtuse explanation of a “BETR” because it is simple math.  

If you pay the tax bill for a Roth conversion with converted funds then you should not be doing a roth conversion.

I think you’re misinterpreting what he is saying.  He makes a lot of money and saves a significantly larger than normal fraction of his income.  
For example, last year I saved 52% of my after tax income and lived on the other 48%.  A pension of 50% of my after tax pay would mean no change to our standard of living and no need to touch our retirement savings.
This is the problem with basing retirement planning on your current income - you should plan based on your expenses.

Originally Posted By Morgan321:
joe: 14% of your savings is “easily 7 figures” implies that you have well in excess of $7million saved at around 50 years old.  If that is the case then your situation is different from 99.9999% of Americans.  


This BETR thing from vanguard that is making the rounds is an oversimplification of one small part of retirement planning.  

I think it does a disservice to most people because it coerces them to narrow their field of view to scrutinize one tiny piece of the retirement puzzle to the detriment of the other pieces.  
To make matters worse, that question (does a Roth conversion make sense) is easily answered without the obtuse explanation of a “BETR” because it is simple math.  

If you pay the tax bill for a Roth conversion with converted funds then you should not be doing a roth conversion.

I think you’re misinterpreting what he is saying.  He makes a lot of money and saves a significantly larger than normal fraction of his income.  
For example, last year I saved 52% of my after tax income and lived on the other 48%.  A pension of 50% of my after tax pay would mean no change to our standard of living and no need to touch our retirement savings.
This is the problem with basing retirement planning on your current income - you should plan based on your expenses.

Originally Posted By Joe_Blacke:


Have you verified with your plan, what you are allowed to do with the rule of 55?

While the IRS allows it, not every plan does.  The plans that do, usually have stipulations like:  Distribution limits (either you get a specific percentage or a complete distribution), as well as ordering rules (you often don't get to specify which portion of your 401K you get to withdraw from if you have both pre-tax and Roth).  Most importantly if you take out any Roth before 59.5 you don't pay a penalty but DO have to pay taxes on any earnings.  There is also a mandatory 20% tax withholding using the rule of 55 since this falls under the IRS distribution rules for money going directly to you before 59.5.

My company's plan allows for it, but their ordering rules suck.  Their ordering rules require Roth distributions before any pre-tax (including company match), and I don't want to have my Roth taxed at all.  Thankfully with my plan it does track sources independently and I have confirmed that I can rollout just the Roth buckets into my Roth IRA's leaving just the pretax $$ sitting in my 401K.  Having the 20% mandatory withholding for taxes will suck, but I will get it back when I file my year end return.  I'm only going to take out the equivalent of the standard deduction from the 401K, and then layer brokerage up to the 0% capital gains limit, and Roth IRA withdrawals on top to get the spending I want.  Once I hit 59.5, then the remaining 401K balance gets rolled into an IRA.

BTW, early retirement often greatly reduces any need for Roth conversions.

Originally Posted By Trucker69:


Yeah, I’m gonna need that it english to understand what you’re saying or have a financial advisor explain it in laymen’s terms

Originally Posted By Joe_Blacke:


The IRS allows for the rule of 55 from a 401K plan.  Your plan doesn't HAVE TO allow it.  Many don't.  So if your 401k plan says you have to wait until 59.5 to take a distribution you are not able to use this option.

Assuming your plan does allow for it:

Your 401K isn't just one pile of money that is treated all the same.  You can have multiple types of "sources" inside your plan, again depending on what your plan allows.  Traditional tax deferred money you put in, Tax deferred money your employer matched, Roth Contributions,  and After tax contributions are generally the most common.

When you withdraw money from a 401K, it is different than selling shares in a brokerage.  When you want to withdraw money, your plan custodian has to figure out which "source" bucket to take the money from.  This is called "ordering rules".  If the plan says "roth money comes out before traditional pre-tax money, then the custodian takes the money from the roth contribution sources.  If some of that Roth money includes gains, it isn't treated as roth money, but as ordinary income.  So a default 20% tax on that just like it is ordinary income.  That defeats the purpose of Roth as it is supposed to be tax free.   If the money is being withdrawn from a source labeled as "pre-tax" then the custodian is required by IRS rules to deduct 20% as taxes regardless of what your tax rate is at the end of the year.

The rule of 55 only allows for penalty free withdrawals.  It doesn't bypass the IRS rules that Roth earnings are taxable if you withdrawal them before 59.5.  Pre-tax is always potentially taxable as ordinary income, but IRS rules state if you aren't 59.5 the custodian has to send 20% of distributions to the IRS who will hold onto it until you file your year end return to see if you overpaid or underpaid taxes.  The main difference is that the Roth earnings aren't treated like a Roth distribution, but as regular taxable income until you are 59.5

So, knowing if you plan allows for rule of 55, and knowing the source distribution rules is very important if you want to optimize your withdrawals under the rule of 55.

Now, if people are over 59.5 when they withdrawal from their 401K it doesn't matter.  There are different rules that apply.  Money taken from the Roth source, has no taxes taken out.  Money taken from the Pre-Tax source can has taxes taken out if you want it to.  

My 401K DOES allow for the rule of 55 distributions.  However, the plan description has the ordering rules and it says the custodian has to take money out of the Roth sources first.  My goal is to use the Pre-tax money in my 401K plan and not my Roth money.  So, to get what I want, I need to roll all of the Roth sourced money into a Roth IRA once I leave my employer.  That leaves only Pre-tax contributions and pre-tax employer match left in my 401K plan.  At that point the source ordering is super simple.  I do get hit with a 20% tax on any withdrawals, but I get it back at the end of the year when I file my return since I can control my income to be tax free during retirement.

Originally Posted By Morgan321:
Well since it’s my thread….

I retired from the military around 3 years ago and got a real job.  My 3rd annual performance review is coming up and we have a form to fill out - a few bullets each for accomplishments, 1 year goals, and 2-3 year goals.  I had to make things up for the future goals because I just don’t care.  I’m effectively topped out on pay for what I do and any significant pay increase would require doing things I’m unwilling to do.  My company/coworkers/pay are all great, the job just bores me to tears at times and I’d rather go home and clean my gutters.  And I dislike cleaning gutters.

I have a modest pension and cheap health insurance thanks to Uncle Sam.  I didn’t appreciate  the overall value of even a small pension until I went through the retirement planning process after getting out of the military.  I’m around 50 and our savings rate is very high.  Thanks to being deployed enough over my first decade in the military I paid zero income taxes, so rather than contribute to the TSP and lock my money away until 60 I saved it in a taxable brokerage account.  That taxable account is the key to being able to retire early for me since our expenses are still high with kids at home.  We’ll easily have over a decade with low income before Medicare, so those years will be used for Roth conversions in the 12% tax bracket.  

We’re in the situation where, if I quit working today, we can maintain our current spending without factoring in inflation or investment return.  So if I could guarantee more return than inflation we’d be set.  Great Depression 2.0 is why I haven’t pulled the plug yet - if I work two more years until the youngest kid graduates high school that’s a major padding of our finances due to our very high savings rate.  Picking a time to eject also lets me see light at the end of the tunnel and gives me hope!  

I’ve come to the realization that time is the only thing you can’t get more of.  

Originally Posted By Lexington:
I got laid off into retirement. Fuckers. But I'm in good shape and they can all eat bags of dicks.

Originally Posted By FALARAK:

Hell that's my dream.  Package me out!

Originally Posted By Procat:
I remember you mentioning that as a possibly awhile back, guess it didn’t happen then?

Originally Posted By DVCER:
Something to think about is long term care insurance.  If I had to put my wife in a home, minimum of 180k a year.

Originally Posted By bradbn4:
The hardest thing to manage was my sleep pattern.  I did figure out after more
time than I like to admit...working out and hitting the tread mill to earn the sleep.

Originally Posted By FALARAK:

I guess it depends greatly on location and level of care.

My mother had to move to assisted living.  Hers is $45,540 per year.  It was discounted due to vacancies, and will go up to $57,540 in about 18 months from now.  Her small pension, social security, and meager investment income cover all of that.

Obviously, this will get more expensive as level of care needs increase.  They have a memory care wing that does raise the price significantly.

Originally Posted By Justa_TXguy:
I could technically retire now although it would be a very austere retirement.

I'd rather keep working so I can have plenty of money and leave a legacy.