The 3 Best Ways To Access Your Money For An Early Retirement (without a large cash-drag on your portfolio)

(don’t forget to checkout the video of this blog too)

The biggest challenge with an early retirement is figuring out where to take income from!

If you have all your money in retirement accounts you can’t touch those until 59–1/2.

Otherwise you’re going to pay a hefty 10% penalty (on top of the taxes due).

But, if you save outside of retirement accounts you lose a LOT of efficiency in your accumulation years.

So you want to maximize the benefits of your retirement accounts….

And have accessible money.

But where can you really pull income from if you want to retire at 55⁉️

✅ 1) Leverage the “Age 55 Rule”

If you leave your employer you can begin withdrawing income from your old 401k.

You just have to leave it at your employer…

So you CANNOT roll it over to an IRA (even though I normally recommend that).

But this gives you one bucket to withdraw penalty-free income from starting at 55.

✅ 2) The 72t — Equal Payment Rule

The 72t Rule allows you to draw income from retirement accounts as early as you want…

But once you start you CAN’T STOP for 5 years or until 59–1/2 (whichever is LONGER).

Annuities are often the easiest and best way to provide and manage these type of early-retirement, income payments.

✅ 3) Non-Retirement Accounts

This type of money has no 10% penalties to deal with (which is great).

The money in these accounts can still be invested in the market, but it doesn’t have to be.

This is what I consider your “cash bucket” that can help you bridge the gap until retirement assets become available at age 59–1/2.

🔑 Key Point Below 👇🏻 🔑

Cash feels good but it’s not a strategy‼️

If you have too much cash in your portfolio it will create a negative effect on your the overall returns of your portfolio, often called a “cash drag”.

One of the best ways to keep “cash” without the “cash drag” is by utilizing a cash value life insurance policy (but it has to be a very specific type).

This gives you better-than-cash returns with virtually no risk.

Plus, you have all of the same tax advantages of your retirement accounts (with the added benefit of being able to transfer the full value of the contract tax-free to your loved ones when you pass).

Let’s Chat 💬😎