Below are some things to consider first.
- Health Insurance
If you are covered by your employer’s health insurance and retire before age 65, Medicare age, you will need to bridge the gap.
- What type of savings account should you use?
Each account has different rules and tax laws associated with contributions and withdrawals. One account may be favorable for person A, but not for person B.
- Withdrawal Rate
If you are withdrawing from your savings for income, pay attention to the percent you are withdrawing. You may outlive your money if you’re withdrawing more than your earnings.
- Early Withdrawal Penalties
There may be penalties on withdrawals from your retirement account prior to age 59 ½. Consider other sources of savings or workarounds such as Rule of 55 and 72T Rule.
- Which account do you withdraw from first?
Tax plays a large role in determining the best account to withdraw from. You can maximize your income with a strategy.
- Large Emergency Fund
You want to avoid selling securities in a down market.
There’s a lot more to consider than this, that’s why you should consider a “retirement plan” rather than just winging it.