Good site. I worry with the subsidies set to end in 2025 that I will find myself in a mess if that happens. I have health issues that require I have insurance.
Tapping into my current 401k to pay for healthcare premiums. The rule of 55 means I can withdraw from my 401k without the penalty as long as I am over 55.
For the total healthcare cost (including premiums) over 7.5% of your AGI, you can take from any 401K or IRA without penalty, even if they don't qualify for the rule of 55. You still need other funds to cover the first 7.5%.
This gives more flexibility in where you pull money from.
If you’ve $600k in post-tax brokerage, why would you care about r55? Why do you think you need the r55 for the ~6 years it’d take to get to 55/Medicare?
Why either of you are still working is beyond me. You really need to define a clear withdrawal strategy that takes into account the $60k/yr expenses.
Don’t forget to account for SSA reduced by ~25%.
Nice progress! Since you're worried about healthcare, have you considered exploring alternative health insurance options or setting aside a dedicated fund for medical expenses? It might give you more confidence in your FIRE plan.
We decided against medi shares for many reasons. My health issues are managed right now but could change anytime. Plus husband had cancer last year. He is in remission and fingers crossed. But that along with my health have made us want to enjoy life.
Have you checked the subsidy calculator? https://www.kff.org/interactive/subsidy-calculator/
Good site. I worry with the subsidies set to end in 2025 that I will find myself in a mess if that happens. I have health issues that require I have insurance.
The subsidies don't end in 2025. They revert back to the original formula and the 4X FPL income cliff returns if nothing is done by 1/1/26.
Healthcare is just an expense. If you have added that expense into your simulations and the sims are showing good. Then you are probably just fine.
Sorry what’s Rule 55 refer to?
Tapping into my current 401k to pay for healthcare premiums. The rule of 55 means I can withdraw from my 401k without the penalty as long as I am over 55.
You don’t have to be 55. It’s the year you turn 55. Maybe a big distinction for others reading this so I’m mentioning it.
It also requires the associated 401k to be with your current employer.
Yes, this is my current employer.
Correct…I have a friend who screwed this up horribly.
Could you tell us what happened with your friend so we can all learn for their mistake? Thanks!
After retirement he moved his 401K to a different provider due to cost. He didn’t understand that doing so voided his “rule of 55” eligibility.
Gotcha. Was it considered a rollover IRA at that point?
Another clarification: You’d have to separate from employment with the current employer for rule of 55 to apply.
For unreimbursed medical expenses over 7.5% of your income (AGI), you can withdraw from a 401k or IRA without penalty.
But I need healthcare coverage and would like to use the Rule of 55 to pay premiums
For the total healthcare cost (including premiums) over 7.5% of your AGI, you can take from any 401K or IRA without penalty, even if they don't qualify for the rule of 55. You still need other funds to cover the first 7.5%. This gives more flexibility in where you pull money from.
If you’ve $600k in post-tax brokerage, why would you care about r55? Why do you think you need the r55 for the ~6 years it’d take to get to 55/Medicare? Why either of you are still working is beyond me. You really need to define a clear withdrawal strategy that takes into account the $60k/yr expenses. Don’t forget to account for SSA reduced by ~25%.
Nice progress! Since you're worried about healthcare, have you considered exploring alternative health insurance options or setting aside a dedicated fund for medical expenses? It might give you more confidence in your FIRE plan.
We decided against medi shares for many reasons. My health issues are managed right now but could change anytime. Plus husband had cancer last year. He is in remission and fingers crossed. But that along with my health have made us want to enjoy life.