The Bridge Account (Retire Early)

Mar 29, 2024

When will you retire? Will you work to age 70, 65, 60, or maybe you have the desire to retire even earlier.

Most of us wish we could retire as soon as possible, but how will we afford to live if our retirement money is stuck in our 401k's and IRA's (in the U.S.)?

Most people who are saving for "retirement" contribute to accounts like 401k's, 403b's, IRA's, and other traditional retirement accounts (you've probably heard about most of these).

These accounts are great to provide income in your retirement years, but did you know if you took money out of these types of accounts before age 59 1/2, you'll be penalized? That's right, in addition to the taxes you'll need to pay on the money, the government will take an additional 10% as a penalty for early withdrawals.

So, if you want to retire at age 55 and don't have access to your money until 59 1/2, what do you do for income over that period of time? You need to prepare for this scenario now and learn about what we call a "Bridge Account". This account acts as the bridge of income from your actual retirement age (in this example, 55) to the time you can take out money from your traditional retirement accounts.