Episode 151: Financial Strategies for Early Retirement

Nov 5, 2024

Jessica Wunder, an advisor at McLean Asset Management, joins the discussion on crucial financial strategies for early retirement. She sheds light on the complexities of early withdrawals from retirement accounts like IRAs and 401(k)s. Key topics include the Rule of 55 for penalty-free withdrawals, unique exceptions for public safety employees, and new provisions from Secure Act 2.0. They also explore the 72T strategy for early, penalty-free access and various exceptions for medical expenses and education costs, making retirement planning more accessible.

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Intro

00:00 • 3min

Navigating Early Retirement Withdrawals

03:03 • 11min

Navigating IRA Distributions and Exceptions

14:04 • 2min

Understanding Early Withdrawal Rules for IRAs and 401(k)s

15:35 • 3min

Navigating Early Retirement Strategies

18:46 • 20min

Exploring Long-Term Care Expenses and Future Changes in Regulations

38:28 • 4min

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau with Jessica Wunder from McLean Asset Management delve into the complexities of early withdrawals from retirement accounts, specifically IRAs and 401(k)s. They discuss the penalties associated with early withdrawals, the Rule of 55, and various exceptions allowing penalty-free access to funds. The conversation highlights the differences between IRAs and 401(k)s, including specific exceptions applicable to each type of account. In this conversation, the speakers discuss the new exceptions introduced by Secure Act 2.0, including emergency withdrawals and disaster recovery relief. They delve into various early withdrawal exceptions, such as those for death, disability, and medical expenses. A significant focus is placed on the 72T approach, which allows for early withdrawals without penalties under specific conditions.

Takeaways

The Rule of 55 allows penalty-free withdrawals from 401(k)s after age 55.
Public safety employees have unique exceptions for early withdrawals.
You can withdraw for medical insurance premiums if unemployed.
Educational expenses can be covered by early withdrawals from IRAs.
The 72(t) strategy allows for substantially equal periodic payments.
There are strict rules governing early withdrawals from retirement accounts.
Early withdrawal exceptions include death, disability, and medical expenses.
The 72T approach allows for substantially equal payments from retirement accounts.

Chapters

00:00 Introduction and Guest Introduction
01:38 Understanding Early Withdrawals from Retirement Accounts
04:02 Exploring the Rule of 55
11:09 Exceptions for IRAs vs. 401(k)s
15:57 Common Exceptions for Early Withdrawals
18:00 New Exceptions in Secure Act 2.0
22:00 Understanding Early Withdrawal Exceptions
30:00 The 72T Approach Explained
35:59 Planning for Retirement Cash Flow Needs

Links

Click here to download Retirement Researcher’s free resource, “Exception to Early Withdrawal Penalties“: https://retirement-researcher.ontralink.com/tl/476

We’re hosting another YouTube LIVE Q&A episode for RWS! Click here to submit your questions: www.retirementresearcher.com/ask

Watch this episode on YouTube: https://youtu.be/EzdIgudCkPQ?feature=shared

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”