Bridging the Gap Between Retirement and Social Security

Jose, I’m 55 and thinking of retiring next year. I won’t be eligible for Social Security until 62, and I’ve heard I can’t touch my retirement accounts until 59½. What should I do?”

Answer: This is a common concern—especially among teachers, first responders, and municipal workers who often retire earlier than traditional age milestones. The key question I always ask is: Are you retiring for good or just shifting into a different kind of work?

If you’re planning a second-act career (think: working at a local garden center or consulting part-time), that income might help fill the gap. But if you're retiring fully, we need to think strategically about how to generate income before Social Security and penalty-free retirement withdrawals kick in.

Here are a few common strategies:

1. 401(k) Rule of 55

If you retire in the calendar year you turn 55 (or later), some 401(k) plans allow you to take withdrawals without the 10% early withdrawal penalty. But the key here is: leave the money in your 401(k). Rolling it to an IRA too early will eliminate this option.

2. 72(t) Distributions

You can also take “substantially equal periodic payments” from an IRA or 401(k) before age 59½ using IRS Rule 72(t). This allows penalty-free access, but it’s strict—you must commit to the same withdrawal schedule for at least five years or until you turn 59½ (whichever is longer).

3. Bridge or Brokerage Accounts

If you have a taxable investment (brokerage) account or Roth contributions you can access, these are excellent tools to bridge the gap between retirement and traditional retirement income sources. Some folks call these “bridge accounts,” and they offer flexibility that retirement accounts can’t.

4. 457 Plans

These are a hidden gem for educators and government employees. You can access funds penalty-free as soon as you separate from service, regardless of age. Many of my clients in higher ed or public service don’t realize how powerful this can be as a gap-filler.

If you’re close to retirement and don’t have these options lined up, we work with what you do have. But if you’re younger and still planning, this is your sign: don’t just save in your 401(k). Build in flexibility—save in multiple types of accounts to create options for different life stages.

Need help building your bridge to retirement? Reach out—we’re here to guide you through the next step.