BiggerPockets Money Podcast

560: Dude ACTUALLY Withdraws From His 401(k) and Retires at 47

Sep 3, 2024

Eric Cooper, a savvy retiree who left the workforce at just 47, shares his journey using the 72(t) rule for early withdrawals from his 401(k). He reveals how he strategically accessed $30K annually, avoiding penalties and maximizing his retirement savings. Eric also discusses his impressive real estate portfolio, emphasizing tax advantages and smart investment strategies. Listeners will learn how to break free from the middle-class trap and explore lucrative opportunities to secure their financial future.

50:39

Episode guests

Eric Cooper

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Quick takeaways

The 72(t) rule allows for early, penalty-free withdrawals from 401(k)s through substantially equal periodic payments, facilitating early retirement.

Diversifying income sources beyond retirement accounts, such as rental properties, can enhance financial flexibility and security during early retirement.

Deep dives

Understanding the Middle Class Trap

The middle class trap is characterized by individuals who possess significant wealth, often in the form of retirement accounts or home equity, but find their funds inaccessible without penalties until retirement age. Accessing retirement funds early can be a game-changer, allowing individuals to utilize their assets for immediate needs without incurring hefty penalties. The 72T rule provides a means to withdraw from 401(k) and IRAs before reaching the age of 59.5 without the 10% early withdrawal penalty, enabling financially savvy individuals to access their investments while still young. This approach is particularly beneficial for those who have diligently saved within their retirement accounts yet wish to retire earlier and enjoy their wealth without waiting for the traditional retirement age.

Navigating 72(t) Distributions and Real Estate Sales

02:09

Navigating Early Retirement and 401(k) Withdrawals - 72(t) Real Life Use Case

05:08

Managing Wealth and Taxes Through Early Retirement

03:21

Leveraging the 72T Option for Early Retirement Withdrawals

04:46

Intro

2min

Leveraging the 72T Option for Early Retirement Withdrawals

5min

Understanding 72(t) Distributions and Early Retirement Planning

2min

Uncovering Lucrative Investing Opportunities in Rental Properties

2min

Navigating Early Retirement: Strategies for 401(k) Withdrawal

22min

Commercial Break: Solutions for Rental, Business, and Beyond

3min

Navigating 72(t) Distributions for Real Estate

14min

Did you know you can use your 401(k) to retire early? Yep, it’s possible. And today’s guest, Eric Cooper, is doing it atage 47! Most FIRE chasers search for how to withdraw from a 401(k) early but know that doing so will hit them with substantial penalties. The best way around this? The 72(t) rule—which is precisely what Eric has been taking advantage of. Eric uses the 72(t) rule’s “substantially equal periodic payments” to take early withdrawals from his 401(k) of $30K per year, starting at age 47. But how does it work?

Eric comes on the show to describe exactly how this early withdrawal rule works, how much you can take out, the regulations to follow so you avoid penalties, and why early retirement may be much closer than you think. But this isn’t the only early retirement income Eric has got. We’ll review his substantial real estate portfolio and detail Eric's almostunbelievable tax savings from combining tax-advantaged rental properties with rule 72(t).

Plus, Eric shares how he built a multimillion-dollar nest egg by his mid-forties and why those starting young on the path to early retirement can repeat his strategy to be much richer in retirement. Do you have money sitting in retirement accounts that you’re ready to use? The 72(t) rule might be just what you need.

In This Episode We Cover

How to access retirement funds early with the often overlooked 72(t) rule

Escaping the “middle-class trap” that stops you from retiring on your terms

Avoiding 401(k) penalties and using retirement accounts to actually retire early

The rules and regulations you MUST follow to withdraw penalty-free

How Eric amassed such a massive retirement account balance (and how you can, too)

Early retirement healthcare and how to lower your taxable income to greatly reduce premium costs

And So Much More!

Links from the Show

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