Retirement & Early Retirement

Deciding when to retire isn’t about hitting some magic number on your bank statement. Everyone’s vision of retirement looks different: some dream of extravagant travel, others picture quiet days at home, and many want something modest in between. The real question is: How can you retire on your terms without running out of money before you run out of time?

That’s where planning comes in. Retirement isn’t just about building a nest egg. Retirement is about turning your savings into steady income that lasts. This means thinking ahead about:

• How much you’ll need each month to cover your lifestyle.
• When to start drawing Social Security (and how it fits into your income picture).
• How to plan for healthcare and Medicare.
• Ways to protect your money from outliving you.

The earlier you plan, the more options you’ll have. Whether you’re years away or just around the corner, the right strategy can give your hard-earned money the chance to work just as hard for you.

Types of Retirement Accounts

Most people build retirement savings through a combination of accounts. Each comes with different rules, tax advantages, and ages to keep in mind:

401(k) or 403(b) (Employer-Sponsored Plans)

• Offered through your job.
• Pre-tax contributions lower your taxable income now.
• Growth is tax-deferred until you withdraw.
• Many employers match contributions (essentially free money).
• Penalty-free withdrawals typically begin at age 59½.

Traditional IRA (Individual Retirement Account)

• Available outside an employer.
• Contributions may be tax-deductible depending on income.
• Grows tax-deferred, withdrawals taxed as income.
• Withdrawals allowed penalty-free starting at 59½.
  

Roth IRA

• Contributions are made with after-tax dollars.
• Growth and withdrawals are tax-free if certain conditions are met.
• Contributions (but not earnings) can be withdrawn anytime.
• Tax-free withdrawals of earnings generally allowed at 59½ (and if the account is at least 5 years old).
  

SEP IRA / SIMPLE IRA

• Often used by small business owners or self-employed individuals.
• Contributions are tax-deductible and grow tax-deferred.

Brokerage Account (Non-Retirement)

• Not tax-advantaged, but completely flexible.
• Useful for those retiring early and needing access before 59½.
  

Required Minimum Distributions (RMDs)

For certain accounts, you can’t leave the money in forever. The IRS requires you to start withdrawing at a set age, known as Required Minimum Distributions (RMDs):

• Applies to Traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer plans (401k/403b).
• Does not apply to Roth IRAs during your lifetime.
• Current law (SECURE 2.0 Act):
• If you were born 1951–1959, RMDs start at age 73.
• If you were born 1960 or later, RMDs start at age 75.
• These withdrawals are taxable as ordinary income. Planning ahead for RMDs is crucial—you don’t want a surprise tax bill in retirement.

When Can You Retire?

There’s no single age that defines retirement. It depends on your finances, goals, and health. A few key ages to know:

• 59½: Age when you can begin penalty-free withdrawals from most retirement accounts.
• 62: Earliest you can claim Social Security (though benefits are reduced).
• 65: Eligible for Medicare.
• 66–67: Full Retirement Age (FRA) for Social Security, depending on your birth year.
• 70: Latest age to delay Social Security, with the largest monthly benefit.
• 73–75: Start RMDs from tax-deferred retirement accounts.