Investment advice for 55 to 59.5

[b4u2]

I'm currently 43 and plan to retire at 55 with a pension. I will have 35 years with the same company and should have a decent 401k.  I know I can withdraw from the 401k at 59.5 but what can I invest in that I can draw at 55? The only investments we have are my pension, my wife's ipers, 401k. I'm looking for something that can help us cover from 55 to 59.5 when we can start drawing from the 401k. I just need ideas and not sure where/what to ask.

[Rob_bob]

I don't have a 401k so I don't keep up with the rules but there is something called the rule of 55 which allows you to start taking distributions at age 55 without tax penalty.

https://www.thebalance.com/what-is-the-rule-of-55-2894280

[b4u2]

I don't have a 401k so I don't keep up with the rules but there is something called the rule of 55 which allows you to start taking distributions at age 55 without tax penalty.

https://www.thebalance.com/what-is-the-rule-of-55-2894280

I did read about that and if it's an option when I retire I will certainly use it if needed.

[yachi]

Bowls of fruit.

[yachi]

Bowls of fruit.

While drawing still life is something you may enjoy at 55, let me offer some better suggestions.

You can treat the 10% "penalty" for withdrawing money from any account like a tax, and just not care.

You can withdrawal without penalty from your current 401(k) at age 55 if you quit: https://www.thebalance.com/what-is-the-rule-of-55-2894280

There is the Roth ladder strategy, where you put money in a traditional IRA while you work, then roll it over to a Roth IRA at a later date.  You pay taxes when you perform the rollover, but not penalties.  You have to wait 5 years before you can pull the money out of the Roth IRA, so you roll over a year's worth of expenses for 5 years before you take the money out.  In your case this would not be the best strategy as you would need to start rolling IRA money at age 50 for it to be available at age 55.  Since you're still working, you may owe more in taxes than the 10% penalty you're saving.

[travel2020]

Since you are 43 now, you could invest some funds over the next 12 years via a taxable brokerage account and use that to bridge the gap from 55-59.5. Of course, you will need to pay cap gains on any investments you sell then depending on your income, etc.

[uniwelder]

I don't have a 401k so I don't keep up with the rules but there is something called the rule of 55 which allows you to start taking distributions at age 55 without tax penalty.

https://www.thebalance.com/what-is-the-rule-of-55-2894280

I did read about that and if it's an option when I retire I will certainly use it if needed.

In that same article, there's a short description of the IRS 72(t) SEPP.  It doesn't go into detail, but you can use it at any age.  Try looking that term up for another withdrawal option.