How do you retire early if all your money is in retirement accounts

[meatface]

I'm guessing that many people have a huge portion of their net worth locked up in retirement accounts. For example, if you are currently 45 years old, have been working/saving steadily since age 22, and socking away most of your savings into an IRA and 401k, then most of your money is untouchable for another almost 15 years.

How can I retire at, say, age 45 while having the majority of my money locked away, i.e., very little cash flow until age 59.5? I can't retire, right?!

[fattest_foot]

forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5

[new mustache city]

In addition to the above, you will be retiring on a "safe withdrawal rate" of e.g. 4%. So as long as you have 4% of your net worth in accounts you can access at whatever age you are, the fact that the other 96% might be inaccessible isn't relevant.

[MDM]

In addition to the above, you will be retiring on a "safe withdrawal rate" of e.g. 4%. So as long as you have 4% of your net worth in accounts you can access at whatever age you are, the fact that the other 96% might be inaccessible isn't relevant.

Yes, not all needs to be accessible without penalty immediately.

May want more than 4% accessible, though, because a 4% withdrawal rate would consume that in the first year.  Need something for year 2 and beyond.

The link given by fattest_foot covers things well.

[Dicey]

The reason to sock away money into investments early is to tap into the motherlode that is compound interest. As one gets closer than FIRE and the early investments are growing astoundingly, it becomes easier to save a smaller pile of cash to live on in the early years of retirement. This is immensely helpful if one FIREs into a down market. We have 3 years expenses in cash. It doesn't really matter if it's not earning much, because we have way more than that solidly planted in investments.

Also +2 to fattest_foot's link love. Great resource, f_f!

[skip207]

The closer you get to official retirement age the smaller stache you will require.  So its a curve that gets easier to meet the older you get.

You may also want to use a different method from the SWR method.  This method ensures your initial capital does not reduce.  However if you have enough in retirement accounts and just need to bridge the gap then it becomes less important to keep the capital. 

I plan to have c.200k to get me from FIRE to pension age and I will start by spending investment returns and a small portion of the capital but towards the end the returns will be small so it will be a large chunk of capital spending.  I am comfortable with this as I have other money in the pension and also other savings.