Interpret the future early withdrawal penalties chart

Tip: For easier reading, click    (above).

For some retirement plans, withdrawals at an age earlier than 59╜ are subject to a 10% penalty. This graph shows the years in which these penalties will be due.

When withdrawals are necessary, the Lifetime Planner figures out how much money needs to be withdrawn to cover the cash shortfall as well as to pay taxes on the realized gains from selling an investment. The Lifetime Planner withdraws money first from taxable investments. Once that money is depleted, it withdraws from stock options. If still more money is needed, withdrawals come from your tax-free retirement accounts. This withdrawal technique is designed to minimize taxes and maximize your investment growth.

A good financial plan is one that has only a few years (or none at all) with early withdrawal penalties. If you have withdrawal penalties, this means you need to increase your savings to taxable accounts, or reduce or postpone some of your expenses.