Planning an Early Retirement Withdrawal – Be Cautious!
“You must be judicious in withdrawing money from a retirement plan because you may tend to withdraw too little or too much. ”
Sometimes it becomes necessary to indulge in an Early Retirement Withdrawal. The family conditions or your own priorities may necessitate so. You must not take such a decision in haste but view all the pros and cons of such a step.The first thing to keep in mind is that you will have to pay an increased amount of income tax. Secondly, you must also realize that you will fall in the highest tax bracket and are almost sure to pay a penalty to the tune of 9-10 percent of your income. This will be in addition to your normal tax.
Nevertheless, in certain conditions you may be exempt from this type of penalty especially when you have become disabled or are really not able to pay for your increased medical expenditure.
Suppose, you have to withdraw money from a retirement plan that is not your own. In that case also, you don’t have to pay the penalty. This is chiefly the case when you are a beneficiary of somebody’s retirement policy. You may even be a minor to withdraw these funds.
You must be judicious in withdrawing money from a retirement plan because you may tend to withdraw too little or too much. Withdrawing too much money may leave you helpless at a later stage and withdrawing too little may leave you with surplus funds when you may not require them at all.
So, how to calculate the right amount of money? The answer is that you use a retirement calculator. It’s basically a software and is available over the Internet for free. A little amount of practice will make you adept in calculating the right amount of money according to different circumstances.
You just have to suppose some withdrawal conditions and feed all he required data into the retirement calculator. You would instantaneously get the results and would come to know as to the right amount of money required as per your budget.
In this way, you will also be able to decide better whether it is at all necessary to opt for an early retirement withdrawal or not. Mind it, such decisions may seem not too much important at the very outset but as time passes you begin to judge the gravity of the situation. This is especially true of the economically turbulent times of today.
Author - DeeKay
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