Now 57, you’re planning to take early retirement from your current full-time position in order to be more available to help your parents, who need assistance getting to doctors’ appointments and with managing their affairs. You may or may not find yourself able to take on some temporary consulting work in your field for the remainder of this year, but will certainly explore options going forward.
Meanwhile, your Human Resources people have explained to you that the company allows you to take early 401(k) withdrawals under the Rule of 55 (allowing you to avoid early withdrawal tax penalties). You have some personal savings, and your own home is fully paid for and in good shape maintenance-wise. Your wife is in agreement with your plan to retire. Her own parents are deceased, and with her work requiring frequent travel, she is not in a position to help with your parents. Now 59, she plans to continue to work full time for the foreseeable future.
You have not mentioned whether your parents reside in a home, an apartment, or in a facility.
If they do own their primary residence and assuming their health would allow them to occupy it for the remainder of their lives, you might discuss them taking out a reverse mortgage loan.
In any event, once you reach age 62, a reverse mortgage on your own property will allow you to replace taxable withdrawals from 401(k) with tax-free withdrawals from a reverse mortgage line of credit.
Sounds as if the next few years will be a time of adjustment, carefully weighing alternatives in terms of both your own earning opportunities and of your parents’ developing needs.
Think Rule of 55 now, reverse mortgage later.
https://mutualreverse.com/david-garrison
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David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org | Equal Housing Lender