4 Replies Latest reply on Apr 14, 2011 3:35 PM by JerryD

    59.5 - fund access

    Rebado

      Has anyone out there "retired" at age 59.5 just to get access to your retirement funds?

        • Re: 59.5 - fund access
          sschein
          At 59.5 years you can access your Supplementary (SRA, IRA) without any tax penalty.(You will still pay income taxes on the money you take, as regular income, but there is no penalty tax, which you would pay before 59.5 years of age.  No need to retire or pretend to retire to access the supplementary accounts.
            • Re: 59.5 - fund access
              JerryD

              Why would one access Supplementary (SRA, IRA) at 59.5 unless it is needed to live and the income from work is not sufficient? Letting it ride until 70.5 gives many years of tax-free growth. Even though I had periods with no income, I never touiched these funds. In fact I added to them from short term jobs. We lived on savungs and tightened the belt until reaching 62 when I took Social Security followed by the spouse doing so at 62. We continue to supplement from savings and are planning to nearly exhaust savings when at 70.5 we need to take sheltered retirement funds. This strategy, while not perfect in optimizing SS, appears to promise a good life based on the sheltered return of these funds.

              Please explain why one needs to access these funds.

               

                • Re: 59.5 - fund access
                  sschein
                  Hi,
                  I hope I didn't give the idea that I was advocating tapping into SRA's at 59.5 years. I was only pointing out that one did not have to retire to do so at 59.5. But there might be reasons one would want to do that. If you have so much in your retirement accounts that the required withdrawals (mandatory beginning at 70.5 years of age) might cause a needless tax burden, you might want to take some money out before reaching that age and give some to your children, rather than leaving it to them in the form of an estate when they might have less need for it.
                  That is just one example. You might see that you will be in a higher tax bracket later because of the required withdrawals, and decide to take some money out now and pay the taxes and pay off a mortgage, or pay down other debt. But I am not recommending any tax strategy. Each person's case is different, both in terms of needs, circumstances and psychology.  Best to all . . .
                    • Re: 59.5 - fund access
                      JerryD

                      I wasn't sure if you were advocating this. That's why I asked for a reason.

                      If a higher tax bracket is a concern and one has a period of lower or no income, you should consider converting IRA's to a Roth. This involves taxes,but it could be either at a lower rate or no taxes if one has some standard deduction and/or personal exemptions that have no income to offset.