Can You Retire Early With Your Current 401K?
Many Americans have hopes of dreams to retire early by saving enough money through their 401K plan. Is it really possible or are you stuck working longer?
Many Americans are thinking of early retirement, but they are unsure if their 401K could cover this retirement. Below, you will learn how to determine if your 401K could provide for an early retirement. So, be sure to read on if you are considering retiring early!
Your Age and the Impact on Your 401K
Taking your age into consideration is extremely important when you consider early retirement, since your 401K must cover you for the rest of your life. While most people consider retirement between 60 and 65, there are some Americans who consider retiring much later to ensure their 401K covers them.
So, what must you do if you are considering retirement at the age of 53? Well, consider the following: you have created your 401K with the intent of retiring at the age of 60. So, if you retire with your 401K at the age of 53, you are leaving 7 years financially unaccounted for. So, the age of your retirement is something that you must take in serious consideration.
One of the options that is available to you is an early withdrawal, although many experts advise against withdrawing money from your 401K, since it affects the total amount you will have available when you do retire.
When you withdraw some money from your 401K, you must pay a 10% early withdrawal fee; this is another reason why an early withdrawal is far from ideal.
What If My Employer Is Suggesting Early Retirement
It is not uncommon for employers to suggest early retirement, but there is always something you must remember. The longer you work for a company, the more valuable you are and the more they must pay you. So, companies might want to replace you with a cheaper version. They are not that concerned about you being able to survive on your current 401K.
What Is the Perfect Time for Early Retirement?
If you are considering early retirement, it is usually best to be as close to actual retirement age as possible. Yes, you might not be done with work as early as you thought, but it does avoid a lot of problems down the line.
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When it comes to retirement, you must look at your future needs; this may include your expenses, but also unforeseen costs such as emergency repairs and medical bills.
For Americans who feel forced into early retirement by their company, always realise that you have a choice and that a company cannot make you retire early without a valid reason. However, if you feel like your company might be firing you because you refuse to take early retirement, it is best to seek legal council, since this is illegal.
Unfortunately, this type of behavior is not uncommon. When an employee refuses early retirement, the company usually looks for other reasons why they could fire their employee. So, be sure you have everything covered as soon as you feel your company is forcing you to retire. Get legal representation early, and make sure you have proof of conversations and emails before it leads to an actual dismissal.
Disclosure: The information provided by The Financial Genie is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. The Financial Genie does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Additionally, some of the organizations with products on our site may pay us a referral fee or affiliate commission when you click to apply for those products.