I'm 46 and I am planning on working another 7ish years to get my kid through high school and then pulling the retirement trigger. I feel solid about my retirement accounts once I reach 59 but I'm really starting to look at the time from 53-59. Have about 1.4million in my Roth and about 500k in a 401k and HSA sitting about 100k right now. I'll have a smallish pension later on too, plus my wife's smaller retirement accounts and government pension. Have another 150k in a regular brokerage account. College is funded as well.

I have been maxing Roth, 401k and HSA for a while plus putting extra in my brokerage, but I have been thinking about reducing my 401k to just get the match (100% match up to 4%) and then putting the money that was going towards my 401k into the regular brokerage to build up that buffer to last those 6-7 years after I retire. Only debt is mortgage at 2.75% and I don't really think we will live here after retirement so not really in a hurry to pay it down. The equity when we sell it should buy a nice house outright in our final retirement place.

Is dialing back on the 401k a stupid move?

Im dialing back the 401K some


Im 56 and started putting more money into my Roth 401K and taxable account just to have more tax advantaged money in retirement

I've started scaling back my 401K contributions and focusing more on taxable brokerage.

Are y'all familiar with a 72(t) or the Rule of 55 as options for taking money out of retirement accounts before the normal retirement age?

I dialed 401k back to just match in early to mid 40s to build up taxable for the age gap before 59 like you are talking about. I'm 52 and wife is 50 so we are now in the gap.

No 401k contributions at this point at all because we don't have one.

Directing some funds towards the brokerage would give you the most flexibility and be the easiest. It might not be as tax efficient as maxing the 401k and setting up a 72t distribution when you retire, but it likely won't have a major impact. Without knowing your current tax rates (marginal and effective) and what your household income will look like once you retire it's hard to say.

If you are willing to go down the rabbit hole of learning about 72t distributions my gut says that would be the optimal move. You would get a 20%+ tax savings today on the money you put in today and could set up the 72t to only make distributions that fill up your standard deduction and 10-12% brackets in early retirement.

Not stupid at all, just never go below the match.

Rule of 55 definitely deserves some consideration. Of course, you'd need to make sure you keep working until the year you turn 55 or later, so retiring at 53 wouldn't qualify, and the money has to stay in the 401k (not rolled to an IRA) to use it. If you've got any give on the exit date, working to 55 unlocks that 401k early and shrinks the taxable buffer you need to build.

Also, a big chunk of that Roth is probably contributions, which come out tax-free and penalty-free at any age, so pull your basis number. And 53 to 59 with no paycheck is the cheapest tax window you'll ever get, prime for Roth conversions and 0% capital gains, so there is additional opportunity there to get even with the government on any remaining tax-deferred balances then.

Congrats OP! You've prepped very well . A lot of things can chamge over the next 7 + yrs that could impact your direction but your family appears to be in great shape. The one thing I would say is medical insurance is probably not going to go down in price so setting yourself up to optimizs the HSA for paying insurance premiums after retirement is something to look at in detail. Don't think your'e home free just because you get to Medicare eligibilty. I'm on Medicare but my wife still has 3 yrs to go and we are currently paying over $2k per month for med insurance premiums. iRMAA is tricky and cap gains made in a tax paid investment account matter on your Medicare premiums.

Thanks for all the input. I'm not really considering the Rule of 55 much because as I understand it, it is only for your current employers 401k (only 14k-ish today). The company I am working for now bought my previous company and it's a new 401k now, so it won't be huge in that time, especially if I dial it back. My Roth contributions are around 250k so I could pull those for the gap years. I just got fortunate to start investing early and caught this 20+ year up market, absolutely nothing fancy. Our household income right now is only about 170k and that's been a pretty recent upturn. Making it automatic all these years paid off.

I do feel better now to dial it back on the 401k now though.

HSA can't be used for most medical insurance premiums. The carve outs are for things like COBRA and Medicare which wouldn't apply in this case since most of the time you only get COBRA for a few months after retiring and obviously Medicare wouldn't start until age 65 (in most cases)

I think you are better off continuing to invest in the 401k and do a 72t distribution when you retire.

You will be saving 22% on each dollar you put in today and when you take distributions via the 72t at age 53 and have almost no other income you will be able to get $32k out per year tax free and only pay 10% on the next $25k. So, using todays tax rates you can pull 57k out and owe only $2500 in tax which is a 4.4% effective tax rate. So you save 22% today and pay less than 5% later would be the optimal play.

I am 46 and similar path as the OP targeting early retirement somewhere between 50 and 55. I dialed my 401k back to just company match. Also maxing out HSA and saving all HSA eligible expenses/receipts to be able to take out HSA money tax free during my "bridge" years….i can use those funds to pay for medical insurance.

I'm 43. Still saving 30% to 35% as i have since I was 18, but dialed 401k back and moved that to taxable. I will use Rule of 55 and taxable till 59.5. I really wish I had put more in HSA over the years . I know a lot of people dialing back like we are all discussing. Not a bad idea if you are on track.

Tormentos said:

---

I am 46 and similar path as the OP targeting early retirement somewhere between 50 and 55. I dialed my 401k back to just company match. Also maxing out HSA and saving all HSA eligible expenses/receipts to be able to take out HSA money tax free during my "bridge" years….i can use those funds to pay for medical insurance.

---

I'm not trying to be Debbie downer because I have same HSA fallback plan if I need it, but I just want to give you some context for planning....Health insurance five years from now when you are paying for a private plan is likely going to be $1,500-2,000 per month. That will rapidly eat up your HSA depending on how much you've been able to save. We've been doing HSA's almost since launch and we have $100k in ours.

I'm 52 and we are paying $1,200 per month for a private UHC plan with a $12k deductible. Obamacare was going to be ~$1,700. Your only other real option is something like Medishare which is a crowd sourced, Christian based program. It's very reasonable and actually works pretty well, but have no idea how it might work if something major were to happen. That's about $350 per month with a $12k deductible.

I'm 44 and have very little in the Roth but have about $800k in the 401k and my wife has $180k in her spousal IRA. Once I get to $950k I will reduce to 10% or even down to the 5% match and then go hard into the Roth. I plan on retiring using the Rule of 55 and then 6 years later my wife's Spousal IRA will unlock and hope have $1MM in it.

permabull said:

---

HSA can't be used for most medical insurance premiums. The carve outs are for things like COBRA and Medicare which wouldn't apply in this case since most of the time you only get COBRA for a few months after retiring and obviously Medicare wouldn't start until age 65 (in most cases)

---

Thanks for pointing this out. I had no idea you couldn't use those funds, for the most part, to purchase standard healthcare insurance outside of COBRA. Makes no sense but you're right, Them's the rules. I'm hoping to hold on until I can purchase COBRA for 18 months then go on Medicare and use the funds, if any are left, to buy a Medicare supplement. Thanks for the info.
Add: Can only give one emoji and didn't want to frowny face your helpful post.

Not a dumb move at all. I'm not an advisor, but if I was I would tell you to pull back to 4% while still maxing Roth and HSA, then residual saving to regular brokerage. I was in a similar spot back in my early 30s and started taking additional savings into a regular brokerage account so I could quit working full time anytime after I turned 50. Worked out extremely well for me.

Assuming the 'rule of 72' (double every 7 years) your current 401k of $500k could be $2M when you're 60 without another dollar of contribution. That 401k balance, complimented by your taxable brokerage account + Roth + HSA is a nice mix of accounts to work with heading into your mid-50s.

Medicare is exactly what I was thinking about. Many people assume it's free or low cost but it's not free and it's often not low cost due to IRMAA. It is low cost compared to ACA but I'm paying about $600 a
Month. When I initially enrolled in Medicare in 2024 for 2025 I was told it would be $187 a
Month . Got a letter from SSA a month later that said sorry… you made too much money so it's $ 600+ instead due to IRMAA. It does go down 2 yrs after your income goes down but then again everything counts as income for Medicare/IRMAA including cap gains, Ira withdrawals even if for Roth conversions , probably SS benefits as well altho I haven't started that yet.