Transcript:
Easan Arulanantham:
If I want to retire before 68, should I handle my savings for retirement differently than if I was going to retire at a more common age? Like 65?
Tom Vaughan:
Okay. Yeah. So it depends, again, it. So it really depends on the outflows and whatnot that’s going on. You know, if you’re younger than 59 and a half, and you’re going to retire, we got to deal with, you know, the penalties on these IRAs. And really, the way that we go through this, as you know, I mean, we gather the data, we find out the goals, we find out, you know, what somebody is trying to spend, what other income sources they have coming in. And we go through a financial planning process using Monte Carlo simulation that really tells us what somebody should have. Right. So that’s a starting spot. And you know, how much stock how much bond? What do they need to do? And then essentially, they’re, you know, able to then put in their own desires for their own risk tolerance. So we kind of go from there. So, yeah, I think it makes some difference. But it’s, it’s there’s no like blanket answer, it really is more custom to each person.
Easan Arulanantham:
Yeah, a common thing we see is having some money outside your retirement accounts. So like, kind of like a bridge account.
Tom Vaughan:
Yeah. Because the only way to access your money, if it’s in a retirement account is 72T, and the only issue with a 72T is it’s once you walk into that 72 T, you’re stuck with it until you’re I think it’s five years, five years or so there’s no change in your payments. So if you get that wrong, you’re going to have a lot of issues could be more than five years, it’s 59 and a half, or, or 660. I can’t remember which one of those two things 59 1/2 or 5 years, whichever is longer. So if you actually retire it, this is what’s called the rule of 72 T, it’s a way of getting money out of your IRAs without having to pay the penalty. Even though you’re not 59 1/2 yet, you can use this rule, but it has restrictions. And so you have to take it out for at least five years, or until you turn 50,59 1/2. Yeah, that’s exactly right. So ideally, if you have time, and you’re going to retire before that, you’d want to build up some assets outside of those accounts, like I say, as a bridge, just to kind of get through that timeframe. I’m a big believer that you should build up assets outside of your retirement plans anyway, just because there’s all kinds of different tax issues and liquidity issues that come into play. And I’ve seen clients that have a better balance seems to have a better retirement as far as that goes to. So I don’t think there’s enough attention paid to trying to achieve a balance. And you’d probably want to pay even more attention to that if you were retiring early. You know, before 59 and a half especially