Retiring early takes a plan for three gaps: money you can reach before 59½ without the 10% additional tax, health insurance until Medicare at 65, and the tax brackets you’ll spend in for decades. The tax code has several bridges across the first gap, from taxable accounts to Roth contributions, the age-55 rule and a Roth conversion ladder. Most people pursuing financial independence, the FIRE movement, invest well on their own; the advice that pays off is usually a one-time or hourly review of the withdrawal plan. A one-time plan from a fee-only planner has a median of $2,000, and hourly planners charge a median $300 an hour.
The bridge to 59½
Taking money from a 401(k) or traditional IRA before 59½ usually adds a 10% tax on top of income tax. These are the ways around it:
| Source | When you can use it | The rule that matters |
|---|---|---|
| Taxable brokerage account | Any time | Only the gain is taxed, often at 0% (below) |
| Roth IRA contributions | Any time | Contributions come out first, before conversions and earnings |
| Roth conversions | 5 years after each one | Each conversion has its own 5-year period for the 10% tax |
| 401(k) at the job you leave | If you leave in or after the year you turn 55 | Applies to that employer’s plan, not to IRAs |
| Governmental 457(b) | When the plan allows a withdrawal | No 10% additional tax, except on money rolled in from other plans |
| IRA with equal payments, called 72(t) | Any age | Payments must run 5 years or to 59½, whichever is later |
The Roth conversion ladder
Each year you convert some of a traditional IRA to a Roth and pay income tax on it, ideally at a low rate because you’re no longer earning. Five years later, that year’s conversion can come out without the 10% tax. The IRS says each conversion has “its own separate 5-year period.” So the first conversion has to happen at least five years before you need the money, and the years in between are funded from a taxable account or Roth contributions. Our glossary entry on Roth conversions covers the tax side.
Substantially equal periodic payments
You can take a fixed series of payments from an IRA at any age, set by one of three IRS methods. The interest rate used can be up to the greater of 5% or 120% of the federal mid-term rate. The catch is rigidity: change the amount before the later of five years or 59½, and the IRS adds back the 10% tax on every earlier payment, plus interest. It suits money you’re sure you’ll need on that schedule.
The 0% capital gains bracket
In 2026, long-term gains are taxed at 0% for married couples whose taxable income is $98,900 or less, or $49,450 for single filers. With the $32,200 standard deduction, a couple living on long-term gains and qualified dividends alone could have about $131,100 of income and owe no federal income tax on it, based on those two figures. That’s why early retirees often sell from taxable accounts first and convert to Roth in the same low-income years.
Federal tax and health insurance lines
Source: IRS Rev. Proc. 2025-32; IRS IR-2025-111; HealthCare.gov
Health insurance before 65
Without an employer plan, most early retirees buy a Marketplace plan. HealthCare.gov lists premium tax credits for household incomes between 100% and 400% of the federal poverty level. For 2026 plans, the poverty level for a couple is $21,150, so the top of that range is $84,600; for one person it’s $62,600, worked out the same way. Above 400% there’s no credit at all, so a large Roth conversion or stock sale can cost the whole credit for that year.
Income you choose to take, conversions and gains included, counts. That makes health insurance part of the tax plan: a planner should size each year’s conversions and sales against both the tax brackets and the credit.
Social Security and the years you don’t work
Social Security averages your highest earning years. For most people that’s 35 years, and years with no earnings count as zeros. Retire at 45 after 23 working years and 12 zeros go into the average. That lowers the benefit, so the plan should use an estimate built on the years you’ll actually work. When to claim it, at 62 or as late as 70, is covered in our retirement guide.
How much you can spend
The 4% rule was built for retirements of about 30 years. A retirement starting at 45 can last 50. Our entries on the safe withdrawal rate and sequence-of-returns risk explain why a longer retirement argues for a lower starting rate, or a rule that cuts spending after bad years.
Common mistakes
- Rolling a 401(k) into an IRA after leaving at 55, which gives up the age-55 exception for that money.
- Starting the conversion ladder late, without five years of other money to live on.
- Converting past the premium credit line and losing the credit for the year.
- Budgeting health insurance as an afterthought.
- Changing a 72(t) schedule and triggering the tax on every earlier payment.
- Ignoring the 0% bracket, and paying tax on gains you could have taken free.
- Paying a percentage fee on the whole portfolio. At the median 1%, managing $1.5 million costs $15,000 a year, a quarter of a 4% withdrawal of $60,000, based on that rate.
Questions to ask a planner
| Ask | A good answer includes |
|---|---|
| Which accounts would I draw from each year until 59½? | A year-by-year order with the tax on each |
| How much should I convert to Roth each year? | Amounts sized to my bracket and the premium credit |
| What happens to my plan if markets fall in the first five years? | A spending rule, and how much it would cut |
| How did you account for health insurance? | A premium estimate tied to my planned income |
| How are you paid? | A flat or hourly fee in dollars, with no product commissions |
When a fee-only advisor is worth it, and what it costs
If you’ve built the savings yourself, you probably don’t need someone to pick funds. A planner is worth paying for the withdrawal and tax plan, the health insurance math, and a check of your assumptions before you give notice, since leaving a career is hard to reverse.
Fee-only planners who publish prices charge:
- One-time plan: a median of $2,000, middle half $845 to $3,600. It suits a plan you’ll carry out yourself. See one-time plan costs.
- Hourly: a median of $300 an hour, for a review of a plan you’ve already built. See hourly planner costs.
- Ongoing planning: a median of $4,500 a year, for help with the yearly conversion and withdrawal decisions.
Advice-only planners charge for advice and never manage your money, which fits most early retirees; see advice-only financial planning.
How to find one
In the public graph, see flat-fee advisors, advisors for HENRYs (high earners, not rich yet) and advisors for high earners. The retirement planning and tax planning specialties cover the withdrawal and conversion work. Audience pages for HENRYs, high earners and tech employees gather advisors who work with people building toward an early exit.