A Better Way Financial
Empowering Your Retirement Dreams
You’ve worked hard to earn and save. Now it’s time to make your money work hard for you. When you reach age 59 ½, a new set of retirement planning options opens up—and understanding them can help you transition toward retirement with more control, less risk, and greater flexibility. Let’s explore why it’s important for you to plan your age 59 ½ retirement strategy.
The age 59½ rule marks the point at which you can begin accessing qualified retirement accounts—like IRAs or 401(k)s—without paying the 10 % early withdrawal penalty. According to the Internal Revenue Service (IRS):
“If you withdraw money from your IRA before you are age 59½ … you may be liable for an additional 10% tax unless an exception applies.” IRS+1
This milestone becomes especially important as you near your retirement years. It’s your signal to begin shifting from accumulation mode into distribution strategy mode.
Here’s a breakdown of how you can leverage this milestone:
At 59½ you can make withdrawals from tax‑deferred retirement accounts without incurring the 10 % early‑withdrawal penalty (SmartAsset+1). This doesn’t mean you must withdraw—it simply means you have the option.
With many employer‑sponsored 401(k) plans, once you reach 59½ you may qualify for an in‑service distribution (even while still employed). That means you could roll some assets into an IRA, giving you more investment flexibility—especially useful if your 401(k) lacks options for more conservative “safe‑money” vehicles.
Stocks may look attractive after years of accumulation. But what happens when a major market drop occurs right before retirement? Frank Guida, President and CEO of A Better Way Financial explains this concept in a recent Empower Your Retirement Podcast episode on this topic:
“Let’s say you, you’ve saved $2 million for your retirement and all of a sudden you go through a 2008 type scenario where the market dropped by 50%+ and now you’re down to $1 million. You think that makes a difference? Or if you’ve saved $1 million and now you’re down to $500,000, do you feel comfortable saying, okay, now I want retire? …And this is the reason why you have this opportunity to do an in-service distribution. So you can set your portfolio up in a manner that’s more suited for your age and for the time in when you want to retire.”
That’s why strategies such as moving part of your portfolio into lower‑volatility investments—money‑market funds, multi‑year guaranteed annuities (MYGAs), fixed index annuities—become relevant.
To make the most of this milestone, here’s a four‑step plan:
Are you planning to retire at 62, 65, or later? Knowing your retirement target helps you align withdrawals and portfolios accordingly. Working with a financial planner can help you get a clearer picture of when is best for you to retire. Starting now can help you create a proactive plan to help achieve retirement on your schedule.
If you’ve saved heavily in equities, consider how a market downturn could impact your income‑phase goals. A comprehensive risk and return analysis can help you better understand how your portfolio is positioned and if you are taking too much risk for your retirement.
Some strategies include:
Rolling your 401(k) into an IRA (when eligible) gives you more control over asset choices and income streams.
Our financial planners at A Better Way Financial and help you explore all of these options and more. If you are turning 59 ½ or older and haven’t done this work yet, you can set up your complimentary 15-minute Retirement Discovery Call with a member of our team to get started today.
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