Early retirement? Yes please.
This week, I answer questions from the audience around early retirement planning, health savings and debt pay-off.
Question #1: How can I avoid early-withdrawal penalties?
Our first caller is Christianna, who asks two questions:
- I’m interested in early retirement. How can I avoid early withdrawal penalties?
- How does early retirement impact the 4 Percent Rule?
Let’s tackle the first question regarding accounts. TL;DR: focus on your Roth IRA and HSA.
Roth IRAs for Early Retirement
The more detailed answer is that a Roth IRA allows you to contribute up to $5,500 of earned income per year (or $6,500 if you’re 50 or over). You can withdraw your principal contributions penalty-free whenever you want, while keeping the gains invested.