Need to Retire Early? Here's What to Do

Posted by Matt Schwartz on Tue, Dec 3, 2019 @ 09:12 AM

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If you’ve been forced into early retirement, you may be wise to heed the following advice detailed in an informative article in Employee Benefit News.

Seniors should weigh their options carefully before making any moves that could hurt their financial prospects, writes an expert on Kiplinger. For example, they will face a tax bill and possibly a penalty if they dip into their 401(k) prematurely, says the expert.

Seniors who retire early should:

  • consider a part-time job
  • create a tax-efficient withdrawal strategy
  • adjust their portfolio when necessary
  • determine whether they should file for or delay their Social Security benefits.

Couples who are filing for divorce can divide their retirement plan assets through a Qualified Domestic Relations Order, writes a Forbes contributor. A QDRO "is a judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant," writes the expert.

"Although your divorce settlement may say you have rights to a portion of your spouse’s retirement plan, the distribution must be done pursuant to a QDRO so as not to disqualify the plan for assigning benefits to a person other than the plan participant."

Data from Fidelity Investments show that the average employee contribution to 401(k) plans rose 15% to $2,370 per account in the first quarter compared with the same period last year, according to this article on MarketWatch. The average employer contribution also hit a record high of $1,780.

While the figures show a positive trend, some workers will need to boost their retirement plans contributions, as they need to save as much as 15-20% of their pay to secure their golden years.

Topics: Employee Benefits