Not everyone wants to wait until they qualify for Social Security in order to retire. But if you start taking early distributions from various qualified plans, you could be exposed to a 10 percent penalty that can really hurt the longevity of your savings.

That doesn’t mean those who would retire before age 59.5 must continue to work when they no longer want to. Here are five income strategies that can work for early retirees.

1. Take an early IRA distribution using 72t guidelines: Section 72t of the IRS code specifies that a person can access IRA funds before reaching age 59.5 as long as they take a series of substantially equal periodic payments that continue for five years or until they reach age 59.5 (whichever is longer). There are specific rules to determining how much the substantially equal distributions can be, and we can help you figure that out.
2. Purchase an immediate annuity: Non-qualified annuities can offer penalty-free income opportunities. You can design these to begin paying an income immediately that’s guaranteed by an insurance company over your entire life. Another benefit to an immediate annuity is that a portion of the payments—that which is attributed to return of principal—will be tax-free.
3. Access other long-term savings: If you have sufficient long-term non-qualified (non-retirement) savings, you can use them as a temporary bridge between early retirement and the qualified retirement age of 59.5. Remember, however, that it may not be a good idea to liquidate a significant portion of your holdings to pay off large expenses because that can hurt the future growth of your savings and create a significant tax event. Instead, simply liquidate what you need, when you need it.
4. Get a Roth IRA: Contributions to a Roth IRA can be withdrawn any time without tax or penalty. Be careful not to withdraw any of the earnings though because earnings taken from a Roth IRA prior to 59 ½ are subject to both income tax and penalty. Withdrawing only contributions is not necessarily a straightforward process, however, so you should meet with us to make sure you qualify before attempting to make the withdrawal.
5. Work part time: Part-time work can help supplement the added expenses of retiring early. Explore the possibility of switching to part-time work within your current career or getting a different, part-time job.

While many retirement solutions focus on generating income, it’s also important to consider post-retirement expenses. When you control your spending, you may be able to retire early using the resources noted above without depleting too large a chunk of your savings. To develop your comprehensive, early retirement WealthPath, contact Kramer Wealth Managers today.

This information is not intended to be a substitute for specific individualized investment planning advice as individual situations will vary. The information presented here should only be relied upon when coordinated with individual professional advice.