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401k Early Withdrawal Concerns: Rule of 55, Health Insurance, and Social Security

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I’m 57 with $700k: Can I Retire? Today, Troy Sharpe CFP® delves into viewer questions and comments from his original retirement planning video, addressing concerns such as accessing 401k principal penalty-free, managing expenses during retirement, navigating health insurance after leaving employment, and the potential impact of Social Security cuts. This video discusses potential solutions, including understanding IRS regulations for early retirement account withdrawals, adjusting spending based on investment performance, exploring subsidy options for health insurance, and considering means-testing proposals for Social Security.
🏃🏻 Jump right in:
00:00 Understanding Retirement Planning Concerns
01:08 Exploring Retirement Account Access Strategies, Including Rule of 55
02:11 Addressing Financial Challenges in Retirement
03:25 Navigating Health Insurance Options
05:15 Strategies for Managing Healthcare Costs
06:47 Analyzing the Impact of Potential Social Security Changes
11:39 Evaluating Stock Market Forecasts and Economic Factors
20:47 Developing a Personalized Retirement Plan
#retirementincome #socialsecurity #401kprincipal
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🎥 Subscribe to our channel to keep learning here: click2retire.com/subscribe
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Disclaimer:
Nothing in this video is investment, legal or tax advice and should not be construed as an investment recommendation, or an offer to buy or sell any security. Investing involves risk. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser. Insurance services are provided through Oak Harvest Insurance Services, LLC, a licensed insurance agency.
USA Today Best Financial Advisory Firm 2024 criteria was based assets under management over 12 months and 5 years, respectively, and recommendations from 25,000 individuals among financial advisors, clients, and industry experts.
The Investopedia 100 celebrates independent financial advisors who are making significant contributions to critical conversations about financial literacy, investing strategies, life-stage planning and wealth management. With more than 100,000 independent financial advisors in the U.S., the Investopedia 100 spotlights the country’s most engaged, influential, and educational advisors. Troy Sharpe received this award in 2023.

Опубликовано:

8 авг 2024

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Комментарии : 56

@mikeyreacts5839 3 месяца назад

Money is not meant to control people rather it is meant to be put to work producing more money for you. You cannot build wealth without putting money in its rightful place...

@josemanuelmacias7968 3 месяца назад

People don't understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments don't match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.

@joshraphaelbatusin933 3 месяца назад

Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things

@timeformore 3 месяца назад

Your content is very relevant, that’s why we love your videos! Timely information and nuanced discussions on retiring early. I love it! Plus, I always feel more informed after watching.

@OakHarvestFinancialGroup 3 месяца назад

Thanks so much for that feedback, @timeformore, that means a lot! Really glad our videos help.

@Rottingboards Месяц назад

Great ADVICE: IRS RULE T-72 to withdraw money from your IRS and 401K early without penalty. Some limitations, so see your accountant. I did this at 56 and everyday is Saturday. 🙂

@perfectscotty 3 месяца назад

Great information. Thanks.

@OakHarvestFinancialGroup 3 месяца назад

We're glad you enjoyed it, @perfectscotty! Thanks for watching.

@jerrylabat550 3 месяца назад

One approach to mitigate the upcoming SS shortfall would be to remove the cap on earnings and then cap the maximum benefit. Leave the maximum benefit at what it is today, potentially not adjusting that maximum for inflation. This also acts as a means test as well because realistically it is only impacting historical high earners.

@johnkollm3243 3 месяца назад

SS is the most popular program in the country. There will be some tweaks but people who need votes are not going to allow a major reduction in benefits for those at or near retirement in 2033.

@Rottingboards Месяц назад

Trumps Tax Cuts and Jobs Act (TCJA), a $1.9 trillion tax bill favoring corporations and wealthy Americans and it continues. I am not feeling that triple down economics? Are you?

@hhon8938 3 месяца назад

Troy, your content is so informative and insightful! You evoke calm, knowledge enriched talks that is just so helpful. Millennial here so retirement is a bit away but there’s so much to think about. The saving portion I feel is less scary and honestly way more easy vs when we actually have to retire and discuss plans on how to approach distributions and it’s good to know that there is such sound information out there. I love discussions about tax optimization strategies! Touching upon it myself, I’m trying to deep dive into the complex US tax code which is a challenge! Side note that I seriously enjoy your live streams as well - your entire team is so fab! Cheers to everyone :)

@socaljmac7720 3 месяца назад

Unless it has recently changed, my understanding is that to use the Rule of 55 to access your 401k without penalty, you have to leave your current employer in the year that you turn 55. You can roll old employer 401k’s into your current plan, but you cannot access a 401k plan from a previous employer using Ro55 if you left that company before the year you turned 55. Further, the plan administrator can determine how it is done. Mine for example will only allow a single Ro55 withdrawal.

@M22Research 3 месяца назад

Future Market Returns: Gotta be careful relying on investment firms’ predictions. Investment firms have a conflict of interest. 1) They benefit from you being concerned to the point where you save (invest) more than you otherwise would - to keep your “head above water”. 2) No investment firm wants to be “that guy” - the firm that is too optimistic and then clients come back on them complaining “but you said…” when the market underperforms their predictions. Likewise, it is in the interest of investment firms to scare you into believing you have not saved enough to retire. Investment firm “papers” and articles like this sprout like weeds on an unattended lawn.

@Putitonpaper 3 месяца назад

I need to educate myself on these choices. I am 55. Any book/article/online courses recommendations? Avid reader/learner.

@randyke8uvm443 3 месяца назад

I think I read the rule of 55 goes into effect in the year you turn 55. Meaning you could be 54, but turning 55 later in the same year allows you to withdraw from the 401k of the job you separate from whether voluntary or involuntary separation. Is that correct?

@Mr._Rick 3 месяца назад

I believe you are correct

@martinguldner3990 3 месяца назад

The lower than expected US stock market for the next 10 years is why I use covered call ETFs as a part of my portfolio. I use market index covered call ETFs for the S&P 500, Nasdaq 100, Dow 30 and the Russel 2000. I do not have to use as much capital and figure out the strike prices.

@OakHarvestFinancialGroup 2 месяца назад

Hey Martin! Thanks for watching and sharing!

@charleswhite3759 3 месяца назад

why would i invest to gain 1-3 percent?

@Jim-mz1cf 3 месяца назад

The standard deduction would go down if the tax cuts and jobs act expires, but won’t we get personal exemptions back again? That would offset a lot of the standard deduction loss.

@dogegamer3288 3 месяца назад

If you have both a traditional 401k and a Roth 401k with separate balances. Can you rule of 55 keep just the traditional 401k with the employer and withdrawal, and take the Roth 401k and roll it into an Roth IRA? I know you have to keep it at your employer, but if I'm not withdrawing from Roth 401k can I roll that out and just withdraw from the traditional 401k kept at my employer? Anyone know?

@johnkollm3243 3 месяца назад

I believe it’s up to your Plan Administrator’s rules. They may not allow a partial rollover.

@KatieLibby1315 3 месяца назад

There are SS solutions that do not require making the working class work longer and receive less funds, but that would require the Rich to pay their share.

@OakHarvestFinancialGroup 2 месяца назад

Hi there @KatieLibby1315, thanks for sharing your perspective!

@Rottingboards Месяц назад

Trumps Tax Cuts and Jobs Act (TCJA), a $1.9 trillion tax bill favoring corporations and wealthy Americans and it continues. I am not feeling that triple down economics? Are you? VOTE...

@pengmagno7395 3 месяца назад

If projected returns for the next 10 years is 1-3%, add to that the costs of a financial adviser at let’s say 1-1.5% AUM annually then it could be possible that real returns going forward can be flat or even negative! Buyer beware indeed 😮

@Rottingboards Месяц назад

This is all true, but some people need financial advisors to keep them out of real trouble. Our American public are not very good at financial planing or saving. 🙂

@karens6053 3 месяца назад

If my full retirement age at 67 puts me right at the time they plan to reduce payments, my question would be is it better to take social security at age 62 to get the several years of payments before they cut it or wait to collect at 67 and have that benefit reduced

@OakHarvestFinancialGroup 2 месяца назад

Hi Karen, this is a little too complex to answer in a comment - hopefully we'll be able to do a comment video soon so we can help address this. Thanks so much for watching!

@lewiscleale5236 4 дня назад

I turn 57 this coming Thursday. I am still working full-time at a day job and have started a business I will work at part-time after I leave the day job. I have about 750K combined in a 401K and a SEP account. Net worth is good as a result of real estate holdings. Low debt. I also have a pension through my union of $118,000/year if I wait until I am 65 to take it. I'm ready to leave the day job, but I do not know in what sequence I should start to take out funds to live on. SS first at 62? Pension first? Not yet sure of what my business might kick off in income, but it could be 30-80 year depending. Any thoughts?

@OakHarvestFinancialGroup День назад

Hi Lewis, thanks for watching and commenting! Happy early birthday, first of all! While we can’t give personal financial advice over RU-vid comments and without knowing more about your personal situation, I do have a quick question that may lead to us doing a video on this topic. What city and/or state is guaranteeing your pension and do you know the solvency ratio of the pension fund?

@lewiscleale5236 День назад

@OakHarvestFinancialGroup It's a union. The plan is Equity League. Producers (employers) that I've worked for have been required to pay a % of my pay to both a pension plan and a 401k plan (John Hancock) over my 34 year career. Pension statements received annually and the fund is A+. It's fully funded and in the "green zone." I don't know about state guarantees. I've never seen any info from the pension where it was stressed or in danger.

@dougsowell 3 месяца назад

T Rowe Price which is who my current employer uses for a 401k said that they do not allow the rule of 55 for my plan. I've talked to them twice. I just turned 55, today actually. I am not ready to use it but wanted to be ready in case I wanted to but now I don't know what is the truth. So do I just start pulling money out and hope the IRS doesn't penalize me? I'm frustrated not being able to get a straight answer. The first person at T Rowe had no idea what I was even talking about. Jeez.

@johnkollm3243 3 месяца назад

IRS will not penalize Rule of 55 withdrawals (regular income tax) but your employer does not have to allow it. Sounds like yours does not. I would challenge your HR team to change their plan rules.

@christine-jx4fh 3 месяца назад

Yeah. I think he was misleading about that. What he said is technically true. You can retire at 55 and the IRS won't penalize you the 10% if you withdraw, but in your case you have to withdraw your entire account. I called my provider John Hancock and they had no idea about the rule either. My guess is that most plans don't allow it because HR doesn't ask for it. Most people don't retire early.

@pathkris2984 3 месяца назад

I had a long conversation with my provider as well, they will not agree to or acknowledge any of those rules (55 no penalty). I am not sure how to deal with it. The point is, when is the penalty applied, does the provider withhold both tax and penalty or only taxes? If we have to deal with penalty separately with IRS later (during tax filing), what forms are required to prove it was a 55+ withdrawal and from 401k (not IRA). Some questions like these remain..

@pathkris2984 3 месяца назад

@@christine-jx4fh Is there a rule that the withdrawal has to be the entire account? Can you not do partial withdrawals every year on an on need basis until we get to 591/2 when we can rollover to an IRA? Thanks.

@christine-jx4fh 3 месяца назад

@@pathkris2984there are no rules that state you have to withdraw the entire amount. It's what your 401k provider will allow you to do.

@Rottingboards Месяц назад

Thanks for 5.3% talk. Being conservative is key in long term goals. The end goal is going fishing and kayaking. 🙂

@colbyharder4733 Месяц назад

Imagine expecting a 10-year average real return of 1-3% in an environment where AI is going to reduce cost and increase net income.

@OakHarvestFinancialGroup Месяц назад

Hey Colby! Thanks for watching and sharing your perspective!

@Jayollison722 3 месяца назад

In 2024,don't set new year financial goals without consulting a financial adviser.there expertise ensure a solid plan for success.Building wealth involves developing good habits like regular putting money away in intervals for solid investments.

@Richardhernadez369 3 месяца назад

Thanks for the advice! I'm new to financial planning and wasn't sure where to start.Any tips on finding a reliable financial adviser or resource to guide beginners?

@OakHarvestFinancialGroup 2 месяца назад

Thanks for watching, @Jayollison722 and @Richardhernandez369! We believe working with a financial advisor is important too.

@KatieLibby1315 3 месяца назад

"No one is discussing cutting Social Security/Medicare benefits? Uh Republicans are.

@Bud88883 3 месяца назад

SCAMMER!!!💥💥💥💥💥💥💥💥💥

@OakHarvestFinancialGroup 2 месяца назад

Please refer to our regulatory documents on our website to see the costs of doing business with us. We strive to be transparent with our fees while offering significant value to our clients. You can check that out here: oakharvestfg.com. Thanks for watching and take care!

@Rottingboards Месяц назад

I use a financial planner and it's not a scam if they can keep you living in retirement. They provide great advice, strategy, tax benefits, and overall security in your style of living. Longterm goals cost money. Do your homework and find the financial planner that fits your needs and budget.