BOSTON (CBS) – Age 55 seems to be a magical number. It’s the elusive goal for retiring early! I co-authored The Complete Idiot’s Guide to Retiring Early, and most workers under 40 we interviewed wanted to be retired at age 55. They were sure they would be debt free by age 55.

But what we found in our research was that even though 55 was their goal very few individuals could realize an early retirement. One obstacle was the lack of cheap health insurance for Medicare does not kick in until age 65.

And many were still paying off school loans for the kids or their mortgage and the biggest reason was they simply had not saved enough to last them possibly another 35 years.  And you can’t collect Social Security until you are 62 unless you are disabled or widowed.

Normally you cannot get at your retirement money before age 59½ without incurring a 10% penalty. Ten percent is a lot of money to pay to use your own money.

If your 55th birthday has come and gone and you leave your company for whatever reason leave the money in your 401(k).

You can qualify for penalty free withdrawals from your 401(k) plan before age 59½. If you leave your job in the year you turn 55 or are older, but have not reached age 59½ you can have access to those dollars in your retirement plan penalty free. Now you will still owe taxes, but no penalty. This also works if you have a 403(b) plan.

You will have access to those dollars without a 10% penalty.

If you do retire, whether formally or because you can’t find another job at age 55, use the dollars in your non-retirement accounts first so the dollars in the retirement accounts have longer to work for you tax deferred. The longer you can leave them in the retirement plan where they can grow tax-deferred the more you will have.

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