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Generating Retirement Income Before Age 59-½

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You’ve saved diligently your entire working career. You’ve maxed out your retirement savings accounts. And it’s paid off. You’ve reached the point of financial independence, early. Or, maybe you were laid off, or took an early severance package.

Whatever the reason, like me, you got to retirement ahead of the usual schedule. Maybe in your 50’s. Maybe even younger.

But, you could still have a big problem, even if you have enough money saved in your retirement accounts….

Why? Because you can’t generally touch those tax-sheltered accounts without a penalty before age 59-½. If you take money out before then, you fork over 10% of it to the government, in addition to paying taxes on the income. That’s a huge potential drag on your retirement savings withdrawals and your retirement lifestyle.

So, even if you have enough savings to retire, in theory, how and where do you get the cash to live on until you reach that threshold age of 59-½?

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Dealing with an Inherited IRA

paper roll inside chest

The letter caught me by surprise. Titled "IRA/ESA Certificate Maturity Notice," it was from a major credit union where, so far as I knew, I had no accounts. The document went on to say that an IRA Certificate of deposit, with my name on the … [Continue reading]

Gone Fishin’

Darrow crossing middle fork

Are you a beach person, a lake person, a mountain person, or a mixture? For my money, there is nowhere more beautiful on earth than the high peaks in summertime. I don't fish much, but I sure do like to camp, hike, and bike in the mountains. This … [Continue reading]

Identity Theft Strikes Home!

combination lock

Something was very wrong. I sensed it as soon as I scanned my email late that morning, about two weeks ago. Long before my conscious brain could process the data on my computer screen, my subconscious was screaming "EMERGENCY." What was I … [Continue reading]

Camping in Retirement

Van in Sierras

Cooking over a hot flame on a chilly night. Sleeping under an ink-black sky with a million stars all around. Waking to a cool breeze crossing a foggy meadow in dawn's early light. Is there any experience that compares to the joy, the thrill, the … [Continue reading]

What to Do With a Lump Sum in Retirement

sugar cubes on spoon

It's a common problem in or near retirement: A relative passes away and leaves you an inheritance. Or you receive a lump sum pension payout. Or you sell the big family home and downsize. In each case you suddenly have a large sum of cash on … [Continue reading]

5 Simple Asset Allocation Strategies

Pumpkin pie missing slice

Passive index investors reject market timing and stock picking in favor of owning broad index funds. This simplifies most investing decisions, but leaves one very important one: asset allocation. How do you deploy your money across different asset … [Continue reading]

A Strong Marriage in Retirement

Holding hands on the beach at sunset

A stable marriage is the bedrock of personal and financial success for many of us. Having recently celebrated my 30th anniversary, maybe I'm entitled to talk just a little bit about what works, and what doesn't. Though, I know there is no … [Continue reading]

My Biggest Investing Mistakes

burning money

You expect financial pundits to speak with authority. "The market will do this." "The economy will do that." And of course they should be right, because who's going to listen to a money expert who makes mistakes? But I'm no financial pundit. … [Continue reading]

Retirement Calculator News, and a Mystery Solved…

Handcuffs, pipe, and magnifying glass over open book

It was a blustery winter day, just about a year ago, when I stayed indoors all afternoon to work at my desk. The snowflakes stacked on the railing outside as I broke ground on new software, something I hadn't done in years. It would be a modeling … [Continue reading]

My Investment Portfolio: 2017

stock certificates

Boring. Yes, it's been another dull year for my investment portfolio. Other than an IRA contribution at tax time last year, I haven't initiated a single investment transaction since my last portfolio post. We made it entirely through 2016 living off … [Continue reading]

Alternative Investments for Savvy Retirees – Part 2

Bitcoins

In the first part of this series, I noted that the baby boom generation has lived through a uniquely stable period in human history. Sadly, there is no guarantee that this will last. There are forces in the world that could lead to … [Continue reading]

Alternative Investments for Savvy Retirees – Part 1

Eggs in and out of basket

The baby boom generation has lived through a uniquely stable period in human history. Yes, we've seen regional wars, terrorism, and economic dislocation. But there hasn't been wholesale destruction of a developed country, or its financial system, … [Continue reading]

My Favorite Blogs: 2016

Pens and pencils

Blogs are different, and they're valuable. I still get much of my news and most of my analysis from bloggers. I appreciate the individual, idiosyncratic viewpoints -- not the sanitized or one-sided slop we often get from government, corporate, or … [Continue reading]

Is a Robo-Advisor Right for You?

Robot hand on keyboard

It's been more than six years since the first robo-advisor, Betterment, appeared on the investing scene. For a while, robo-advisors were the star of the show. Because they were new, yet built on proven passive index investing strategies, and because … [Continue reading]

My Political Travels

Chaco walls

For its five-year existence, this blog has offered a politically-neutral view of retirement. In keeping with that tradition, I've avoided commenting on the recently concluded U.S. election. Even now, two weeks after voting, there is little that can … [Continue reading]

The Downside of Retirement

Nantucket sunset

Early retirement has been good, in general. I reached my goal of financial independence after years of frugality and hard work. It's fun being here and writing about the details. But, while I'd like to say I’m so much happier now, in reality, I'm … [Continue reading]

The 3 Stages of Retirement Income

Rocket stages

In real life, retirement cash flow is not as simple as the pundits would have you believe. Try a typical retirement calculator, and you'll be prompted for a single expense number: How much would you need to spend from savings to live in … [Continue reading]

How Much Should You Leave to Your Kids?

vintage chest and key

How do you feel about legacy giving? Chances are, you see the issue differently from your own parents. We're experiencing a generational change in views on inherited wealth. Parents of today's baby boomers, having lived through a World War … [Continue reading]

Mountain Vacation Towns of the West

Telluride

Even once you're retired, you'll still probably go on vacation from time to time. What is a vacation but a change of scenery and routine from everyday living? And you still need that stimulation and respite occasionally, even when you are no longer … [Continue reading]

Getting Organized for Financial Independence

Cogs

You can get to financial independence well enough even if you're disorganized. As long as you're also smart and creative. But, you'll reach financial freedom much faster by being organized about your intentions. Sloppiness with your money is no … [Continue reading]