It’s Never Too Early to Plan Your Retirement

Even when you’ve determined an exact date you want to retire, it’s hard to know how many years your retirement will last. So it stands to reason that planning for an early retirement could be a challenge.

However, there are ways. We can take a look at your current financial situation and figure out if there is a strategy to help you retire or semi-retire with a retirement income plan that you can have confidence in. In the meantime, here are a few ideas to bear in mind.

First of all, should you wish to retire at age 55, you will not be subject to the standard 10 percent early withdrawal penalty from your current employer’s retirement plan, including a defined contribution plan, on distributions made before age 59 ½. The penalty-free retirement age drops to 50 for people who work in public safety professions.

Why public safety officers? These generally are higher-risk jobs in which stress takes its toll, leading more people to retire earlier than from other careers. Examples include federal law enforcement officers, firefighters, border patrol officers and air-traffic controllers.

Note that this penalty exception does not apply to IRAs or any retirement plan you may have still with prior employers. This is important to remember if you’re thinking of rolling over your employer plan into an IRA. If you do that when you retire early, you may not be able to tap that money before age 59 ½ without triggering the penalty charge.

[CLICK HERE to read the article, “How to avoid the 10% penalty when retiring early,” from, Feb. 5, 2016.]

[CLICK HERE to read the article, “Getting Your Retirement Money Early — Without Penalty,” from Nolo.]

In the past, another concern with regard to retiring early was health insurance. However, due to health care reform, you can buy your own policy on the exchange to hold you over until you’re eligible to enroll in Medicare.

You may pay higher premiums due to your age, but you won’t be penalized for any pre-existing conditions, such as diabetes or heart disease. Remember, if you’re retiring early and living on far less income, you could qualify for tax subsidies to help pay for your health insurance.

[CLICK HERE to read the article, “The New Rules for Early Retirement,” from Time, 2015.]

While some wealthy entrepreneurs retire early and live a life of luxury, many early retirees choose the trade-off of freedom from work in lieu of wealth. That could mean drastically cutting living expenses. To help you get to that point, reduce expenses while you’re still working and stash that extra cash into your retirement savings. Then when you retire early, it won’t seem like such a lifestyle downgrade.

[CLICK HERE to read the article, “Retiring Early and Moving Abroad: How One Couple Made It Happen,” from Time, 2015.]

[CLICK HERE to read the article, “5 Lessons From People Who Retired at 40,” from, Feb. 3, 2016.]

And finally, one of the most important decisions you can make regarding early retirement is whether to start drawing Social Security benefits. Of all of your retirement assets, this may be the one you want to hold off on the longest.

Here’s a good rule of thumb to consider: If both of your parents lived past 90 years old, delay. If you have major health issues, draw sooner. At the end of the day, it’s all about effectively utilizing the retirement income sources available to you.

Michael Canet is a Registered Representative with TCM Securities, Inc. and can offer securities through TCM Securities, Inc., Member FINRA/SIPC.