Rule of 55
Terry, my company was acquired my esop stock and my savings combined are enough for me to retire early. If the purchasing company changes 401k record holders after I retire will i be able to continue drawing money from the previous 401k account or do I need to wait for all accounts to transfer to the new record holder 401k then retire?
Terry Says
Wait, wait, wait! I think you have a lot of things confused! First, I’ve never heard of the “rule of 55”. Are you confusing that with a 72t distribution, which allows you to start taking non-penalty withdrawals from a retirement account at age 55, if you withdraw on a schedule to deplete the account over your lifetime? Read more and get a calculator for that here:
https://www.bankrate.com/retirement/72-t-distribution-calculator/
But I want to keep you from making a BIG mistake. Have you worked with a fee-only financial planner to calculate the impact of the costs of retirement and needs for income? I don’t know how old you are, or what you mean by “retire early” — but I hope you can hold off on taking Social Security until not only your full retirement age, but actually to age 70. Waiting will give you an 8% income boost for every year you wait, plus all the COLAs along the way — and will provide a higher base for COLAs in the future.
Again, without knowing your age and marital status, I don’t know what you’re planning for medical insurance and expenses — but you really do need to look into those costs. According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2022 may need approximately $315,000 saved (after tax) to cover health care expenses in retirement.
May I suggest that before making ANY retirement decisions you consult with a fee-only FIDUCIARY financial planner to discuss these issues and more. Find one you can trust by reading this link on my website.