How do I retire in my 40s if my savings are tied up in 401(k) and Roth accounts I can't touch until I'm 59?

I'm 35, have $300,000 in a 401(k), $30,000 in a Roth, $350,000 in an ordinary Vanguard stock fund, $60,000 of equity in my home, and $80,000 in a cash balance pension plan that I can roll over to an IRA at retirement.

I make about $106,000 per year and my expenses are about $40,000 (not including income and payroll taxes). I'd like to retire as soon as my net worth can support my current lifestyle, with inflation, until I'm 85 or 90 years old.

The problem is that I'm too heavy in tax-deferred accounts -- I'd be on track to retire in 6-7 years, except that my Vanguard account can't "bridge the gap" between my age at retirement (42) and the age I can tap into my 401(k) and Roth (59.5). So I have to work longer, making my 59.5-age accounts much larger than they need to be when I'm older.

Any ideas for rearranging things so I can break loose from the desk as soon as possible?

Thanks,

Doug

Regarding having not saved enough: I haven't stopped working (or investing) yet. :-) I invest about $30,000 per year and expect my investments to nearly double in the 6 years or so before I retire. My currently lifestyle is $40,000 per year, which I don't feel is overly frugal and would be supported by a nest-egg of about $1M.

You can in fact make penalty-free (you'll just pay the regular income tax) withdrawls from your "tax-deferred" accounts as I understand current tax law; they just have to be structured correctly, making annual withdrawls of lump-sums equal to your total balance divided by the number of years you have left to live (based on actuarial tables), under Section 72(t) of the Internal Revenue Code. With this, you pay applicable income taxes but not an early withdrawal penalty.

Not sure you really have enough saved up yet, though, unless you plan on living VERY frugally in the distant future, and never ever EVER getting sick! Sixty years of "out-of-pocket" healthcare costs or premiums will eat you alive!

You can withdraw any money you put into a Roth after 5 years without paying taxes. Any earnings are taxable when withdrawn if prior to age 59.5 unless done properly.

What is the proper way to withdraw money from an IRA before age 59.5 and not pay penalties. You need to annuitize the withdrawals. That is, the withdrawals are such that it will zero out the account at the end of your life expectancy. An accountant or tax professional should be able to supply you with an appropriate mortality and annuitization table. Hopefully your IRA sponsor could also.

Be sure you check out the IRS rules on this carefully at the time you are ready to retire.

Actually, the money you contributed to ROTH IRA's can be withdrawn at any time without penalty, although, I really doubt the 3-4k you've put in that yearly will be enough to retire on. My advice, don't retire, rethink.

What I mean by that, you obviously don't love what you are currently doing, but you are doing it well to be making the kind of money you are making. Find a way to incorporate what you are so good at into something you are passionate about. Maybe teaching people how to get into your position in life...35 years old, making a great living, living on nothing, and investing wisely. Find a career you are passionate about, and you'll never "work" another day in your life.

Just my thoughts!