This means that a $1 million portfolio would yield $40,000 in annual retirement income in the first year of withdrawals. If you had a part-time job that brought in only $20,000 annually, it would be equivalent to adding another $500,000 to your nest egg!
Aside from the obvious benefits of working (i.e., social interaction, brain stimulation, and personal development), there is a true financial difference in continuing to work part-time past the traditional retirement age.
2. Your 401(k)
If you decide to submit your permanent resignation before you turn 59 1/2 (the age at which 401(k) withdrawals become penalty-free), you’ll be eligible to take from your most recent 401(k) early as long as you’ve already turned 55.
Aptly named the “rule of 55”, this lesser-known rule allows you to take from your retirement accounts early — and without penalty — if you retire and need extra income.
Typically, your 401(k) is meant for withdrawals in retirement, and that time simply comes sooner for some than for others. The rule of 55 exists to theoretically sustain you until you’re able to claim Social Security in your early 60s, but this is of course dependent on your total financial picture.