About Retirement Calculator, Inc.

Recommended Reading

• The Nervous Retiree
• Why You Need Retirement Calculator Software
• Analysis of the Economics of Early Social Security Withdrawal

72 tCalculator

Will a 72t Calculator Help Make Sense of Retiring Early?

When it comes to planning for your retirement, you are likely to find that there are some great benefits to savings and investment plans that allow you to defer paying taxes on your income. Your 401k plan, your 403b and 457 plans: all of these allow you to defer paying taxes until you withdraw the money - however, there are stiff penalties if you find yourself needing to access that money before the government thinks you should (when you are 59 1/2 years of age or older), a penalty of 10% or the amount that you withdraw.

A 72t is an exception that lets you distribute the funds from your retirement accounts so that you can retire early, say at 55 instead of 59 1/2 years of age. With a 72t calculator, you will be able to figure out how your retirement income would be affected, depending upon whether you were to elect to take the required minimum distribution, or to withdraw using the fixed amortization method or the fixed annuitization method. With factors like your age, your beneficiaries age and other details, a 72t calculator will let you determine the substantially equal periodic payments that will let you avoid the early withdrawal penalty.

But before you get caught up using a 72t calculator, you may want to take a better look at the big picture of your retirement income to see whether or not it's the right plan for you. There may be other changes that you could make with your investment strategies and savings like certificates of deposit that would allow you to have access to the income that you need when you retire early without having to deal with the complexities and confusion of implementing a 72t.

The retirement calculator that you can download on this page will allow you to take a closer look at your retirement savings and the changes that you can make to it that may put you into a better position both now and over the long term. With it, you will be able to take a closer look at each of the stocks that you have invested in to determine whether or not there are changes that you could make to you investment strategy that would keep you from having to borrow against your 401k, 403b or 457 account.

Similarly, you will be able to look at mutual funds, and various savings accounts that you have that are not tied directly into your retirement savings that can be used to give you the income that you need. And, because figuring out the best option is a complicated process, when you download the retirement calculator, your contact information will be forwarded to a financial advisor in your area who will follow up with you.

You will be able to get the answers that you need - about 72t calculator results and about other investment changes. You'll be able to ask questions about the 72t distributions and get a sense of the best way to use the savings and investments that are available to you. The advice that you receive from the 72t calculator can do more than just help you to make the right choice, it can also prevent you from making a costly mistake.

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Do You Know the Answers to These Important Retirement Questions?

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• Are you looking for help to achieve your long-term financial goals?
• Would you like to learn more about Annuities, 401's, Life Insurance and Long Term Care?

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Analysis of the Economics of Early Social Security Withdrawal

Robert J. Phillips
Chief Retirement Consultant

Deciding whether or not to take the early withdrawal of social security at age 62 can be difficult. If you need this income at 62 to fund your retirement the decision is fairly straightforward. Take it early! On the other hand, if you have another source of revenue to fund your retirement your decision will be primarily based on lifestyle, health and investment preferences.

Several factors can affect your decision. First is your life expectancy. If you are in good health and have a family history of living beyond 90 then waiting for full benefits may be best. Two other factors impact this decision. First and most important is the value of money or your expected return from your investments. If you are using other investments instead of social security to fund your retirement you should use the rate of return of these investments as your value of money. There is another way to look at the value of money. If you do not require the social security money to live, you can invest the distributions for the future. The rate of return of this investment is your value of money. If your investments will make larger returns such as stocks this would favor taking the early withdrawal.

The last factor impacting your decision is inflation. Social security includes an annual adjustment based on inflation. You cannot control this variable but you should be aware of its impact. If future inflation is significant it will favor a later full distribution

FREE Social Security Calculator:

We developed a calculator to assist in analyzing the impact of taking early benefits at age 62 or waiting for full benefits at age 66 to 67 depending on the year you were born...If you were born in 1960 or later your full benefits will begin at age 67 and your reduction for early benefits at age 62 will be 30%. If you were born between 1946 and 1960 your full benefits begin as early as age 66. We have included a chart that summarizes information.

To use the calculator you need to input your year of birth. You also need to input a value of money up to 10% and a projected inflation adjustment. The calculator analyzes income generated over time from both the early and full benefit investments. It calculates the age at which full social security will catch up and breakeven with the early withdrawal. If you were born before 1960 your breakeven age will be impacted by the year you were born. An early breakeven age favors waiting for full benefits.

The social security calculator is not the final answer whether to take an early withdrawal but it does give you additional economic data to assist in that decision. Ultimately you must balance income, investments and lifestyle to optimize your enjoyment during your retirement years.