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One of the biggest challenges for early retirees, aside from needing to save much more to have their retirement savings last, is that there are early withdrawal penalties on most pre-tax retirement accounts if you fail to obey the rules properly. This complicates matters for early retirees who want to defer taxes on their retirement savings by contributing to a 401(k). Luckily, there are many ways for early retirees to withdraw funds without triggering a penalty. Here are some retirement planning suggestions if you are trying to exit the working world before the traditional retirement age:

Consider substantially equal periodic payment (SEPP) programs. Starting a SEPP program can allow you to withdraw funds from your pre-tax IRA and 401(k) accounts before you turn 59 1/2 without paying a penalty. A SEPP program can be started for an IRA at any time, as long as you keep it going for at least five years or until you are 59 1/2, whichever is longer. There are three different ways to calculate how much you need to withdraw, and all of the earnings will be subject to income taxes. But this type of withdrawal is not subject to the early withdrawal penalty.

Early 401(k) withdrawals if you retire at 55 or later. Whether you quit, retire, or are fired, you can withdraw penalty-free money from your 401(k) if you are at least 55 when you leave the job. However, you cannot take penalty-free early withdrawals from previous employers if you left that company before you turned 55. The workaround, of course, is to move the money into your current employer's 401(k) before you quit if you need access to the funds early.

Withdraw money from a Roth IRA. It's generally best to delay Roth IRA withdrawals as long as possible because the money can generally be withdrawn tax free in retirement, but you can access contributions to your Roth IRA at any time. However, the portion of your Roth IRA balance that comes from earnings will need to stay in the Roth IRA until you are 59 1/2 if you want to avoid penalties.

Do a Roth conversion and then wait five years. Another way to access your money without paying a fine is to convert your pre-tax funds to a Roth and then wait five years. You'll need to scrutinize the numbers to make sure a Roth conversion is best for your tax situation. If you time the conversion correctly in a year when your income is low it can significantly reduce your tax liability.

Use a taxable investment account. If your goal is to retire long before your 60s, you'll probably need to do some of your saving and investing in a taxable investment account. This money can generally be withdrawn and spent at any age without penalty. Just make sure you take into account that you may need to pay capital gains taxes on your gains when you sell your investments.

You will encounter many obstacles to early retirement, but trying to withdraw money from your investment accounts shouldn't be one of them. If you need to tap your retirement accounts early, take steps to avoid the early withdrawal penalty.

David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.

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How to Withdraw Retirement Funds Before Age 59

NAPLES, Fla., Oct. 31, 2012 /PRNewswire/ -- The BMO Retirement Institute today issued a national report which found that many retirees in Florida begin drawing Social Security benefits before full retirement age and may lack understanding of how decisions about this and other key issues surrounding Social Security can affect their lifetime retirement earnings.

The report, Retirees Not Maximizing Social Security Retirement Benefits, revealed that many retirees are taking their benefits too early and are not necessarily aware of options and strategies that may result in higher benefits.

"Rising health care costs, longer life expectancy, and fewer defined benefit pensions mean Social Security could play an even bigger role in ensuring the next wave of retirees feel secure in their retirement," said Jack Kuhn, Florida Managing Director, BMO Private Bank. "It's critical that retirees research their options and get expert advice so they can make informed decisions to maximize their benefits.After all, they paid into the program why not take full advantage of it?"

Timing Affects Dollars

The decision about when to begin taking Social Security can have an impact that can last a lifetime. For example, claiming Social Security as early as age 62 means receiving a reduced dollar amount for life, while waiting until full retirement age or beyond yields a higher amount for life. However:

Key Factors

The report also revealed several factors that influence when people begin taking their Social Security:

Spouses Have Rights Too

Another area affecting retirees is how retirement affects their spouse. The report found that retirees are not fully aware of all their options:

This lack of knowledge means that many could be missing out on thousands of dollars annually, since Social Security rules allow a person to receive up to 50 percent of a spouse's benefit and a widow to receive 100 percent of a spouse's benefit.

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BMO Retirement Institute Report: Floridians Draw Social Security Sooner Than National Average

LEAWOOD, Kan., Oct. 31, 2012 /PRNewswire/ -- The BMO Retirement Institute today issued a national report which found that Kansans delay drawing down Social Security benefits longer than most Americans, and are generally more knowledgeable about spousal benefits. However, they may still not be maximizing their Social Security benefits, due to a lack of understanding around key issues.

The report, Retirees Not Maximizing Social Security Retirement Benefits, revealed that many retirees are taking their benefits too early and many are perhaps not aware of options and strategies to yield higher benefits.

"Today people are living longer, health care costs are rising and there are fewer defined benefit pensions, and combined that means Social Security could play an even bigger role in ensuring the next wave of senior citizens feel secure during their retirement," said Kelli Glynn, Kansas City Managing Director, BMO Private Bank. "It's important that retirees do their due diligence and speak with a professional so they can make informed decisions and maximize their benefits.After all, if you paid into the program for all those years, why not take full advantage of it?"

Timing Affects Dollars

When to take Social Security can have an impact that can last a lifetime, the report noted. For example, claiming Social Security as early as age 62 means receiving a reduced dollar amount for life while waiting until full retirement age or beyond yields a higher amount for life. However:

Important Factors

The report also revealed several factors that influence when people begin taking Social Security:

Spouses Have Rights Too

Another area related to retirees is how retirement affects their spouse. The report found that not all retirees in Kansas are fully aware of all their options:

Being uninformed means that many retirees could be missing out on thousands of dollars every year because, under Social Security rules, a person can receive up to 50 percent of a spouse's benefit and a widow can receive 100 percent of a spouse's benefit.

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BMO Retirement Institute Report: Kansans Delay Retirement - But May Be Unaware of Strategies to Maximize Social ...

LOS ANGELES--(BUSINESS WIRE)--

Transamerica Retirement Services and its client, NGP Management LLC/Dunkin Donuts, were recently honored at the Plan Sponsor Council of America (PSCA) Signature Awards, earning both gold and bronze awards in the Train the Trainer and Increasing Plan Participation and Savings Rates categories, respectively.

The annual PSCA Signature Awards recognize excellence in plan sponsor and participant communication and education. These honors come after NCP Managements retirement plan successfully increased employees' enrollment in the plan by 143 percent from the previous year.

NGP operates more than 120 Dunkin Donuts coffee and baked goods restaurants in New England. The majority of employees (82 percent) work in local restaurants, and do not have access to many of the 401(k) communications sent from corporate headquarters.

The primary goal of the companys campaign was to increase participation in their 401(k) plan. Since established education methods were not working well, the store managers were charged with becoming the 401(k) plan promoters to their employees.

Together with Transamerica, Train the Trainer meetings were conducted in person with the NGP Management human resources department. In conjunction with the training, each store manager was given a package that included a list of eligible employees in their respective stores along with flyers and email templates, giving them all the tools to successfully meet with eligible employees to discuss the importance of retirement planning and encourage enrollment.

Train the Trainer programs help influencers within any organization talk to employees about participation. Transamerica Retirement Services played a key role to help NGP Management increase their enrollment with the support of education consultants. The education consultants presented an overview of the plan, the importance of retirement planning, and offered guidance on how to consult with employees and address their questions.

Financial literacy is a critical piece of the puzzle as we work to prepare more Americans for retirement, said Stig Nybo, president of pension sales and distribution for Transamerica Retirement Solutions. We were thrilled to work with and support the efforts of NGP Management, who have had a clear and direct impact on the retirement readiness of their employees in New England.

The awards were presented at the PSCA National Conference in New Orleans on Sept. 12.

About Plan Sponsor Council of America

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Transamerica Retirement Services and NGP Management Help New England Workers Forge a Path to Retirement Readiness

Last, the model assumes the saver will start retirement by withdrawing about 5% of savings, a higher drawdown rate than the 4% usually recommended.

In reality, says Beth McHugh, Fidelity's vice president of market insight, the multiple you need to save "will vary."

While the model is perhaps simplistic, Fidelity's attempt to quantify a magic number is a worthy exercise because it gets people thinking about savings and encourages young people to start saving early, says Steve Utkus of the Vanguard Center for Retirement Research, an arm of financial-services giant Vanguard Group. The center takes a different approach, urging savers to put away 12% to 15% of their income every year, including employer matches, to reach their retirement goals.

You're working hard to save for a decent retirement. So wouldn't it be nice to have a simple rule of thumb to measure whether you're saving enough?

In September, Fidelity Investments, the nation's largest provider of 401k plans, tried to do just that, offering up a magic number: eight. Typical wage earners, Fidelity said, should aim to save at least eight times their final annual pay to be sure they can afford basic living expenses in retirement.

The financial-services company also offered benchmarks to measure your progress along the way. By age 35, your goal is to save an amount equal to your annual pay. By 45, you will want to have saved about three times your salary, rising to five times your salary by 55.

There is a catch, of course: Most of us aren't typical. And for above-average earners, those numbers might be far too low.

To come up with its formula, Fidelity had to make numerous assumptions. Its "typical" worker began saving 6% of his earnings at age 25, gradually increased that to 12% after six years and continued saving that amount each year until retiring at 67. (An additional employer match helped, too.)

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Retirement #: Is 8 enough?

TORONTO, ONTARIO--(Marketwire - Oct 31, 2012) - The BMO Retirement Institute today issued a report which found that, while Canadians'' top financial goal to achieve over the course of their lifetime is to live comfortably in retirement, many are not confident that they will save enough to achieve this. As a result, one-third of Boomers will or plan to sell their home to help fund their retirement.

The report, Home Sweet Home or Retirement Nest Egg?, examines the relationship between Canadians'' readiness for retirement and their attitudes regarding home ownership:

"The reliance on home equity to fund retirement is no surprise, given that almost half of Canadians say that their home is their biggest financial asset and, on average, accounts for half of their total net worth," said Marlena Pospiech, Retirement Strategist, BMO Retirement Institute. "While it is true that, in the past, Canadians have enjoyed a stable housing market and increasing real estate values, there is no guarantee that this trend will continue.As a result, individuals shouldn''t count exclusively on their homes to fund their retirement and should be focused on building up their personal retirement savings."

According to the report, one-third of Boomers who intend to sell or have sold their home will or have done so to supplement their income in retirement.

Boomers may face a number of challenges when deciding whether to stay in their home or to sell it and downsize.

Market fluctuations: The majority (87 per cent) of Boomers have seen their homes rise in value; nearly half report gains of 50 per cent or more. But, considering the rapidly aging Canadian population, and more Boomers retiring and selling their houses, home prices could fall.

Attitudes toward home ownership: Canadians are torn between holding on to their "castle" vs. treating it as a retirement asset. According to the report, 45 per cent of homeowners do not intend to sell their home, and 34 per cent are unsure if they will sell it prior to or during retirement.

Lending standards: Should they materialize, tighter lending policies and the risk of higher interest rates could reduce the number of eligible homebuyers and motivate people to buy smaller, less expensive houses. In fact, they may lead to people not buying a home at all, which could impact the housing market.

Carrying mortgage and debt into retirement: Recent survey data suggests that many Boomers are carrying mortgages or other debt into retirement.Consequently, Boomers may not have accumulated as much home equity as they would like and may be more vulnerable to an increase in interest rates.

"If your retirement is only a few years away, it is wise to try and pay off your mortgage before you enter retirement," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "On the other end of the spectrum, for younger Canadians entering homeownership, it''s important to consider options that will ensure mortgage debt can be paid down faster and well before their retirement years."

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REPEAT-BMO Retirement Institute Report: Canadians Should Not Rely on Their Homes to Help Fund Retirement

Are you within a few years of retirement? It's time to get your financial house in order. Here are five must-do items to take care of now.

Take a look at all of your company benefits. Your 401(k) might be your biggest benefit, but there may be others. Can you continue medical or other insurance? Are there other benefits that you can continue at reduced group rates? In the case of your 401(k), you need to determine if you want to leave it with your soon-to-be-former employer, roll it into an IRA, or take a distribution. The last choice will likely result in a hefty tax bill, so this is generally not a good idea for most folks. Do you have company stock options that you haven't exercised? Check the rules here. Speaking of company stock, there are special rules called net unrealized appreciation to consider when dealing with company stock held in your 401(k).

Take a look at any pensions from current or former employers. Depending upon the rules of the plan, you may have several decisions to make with regard to your pension benefit if you are covered by one. Do you take the benefit immediately upon retirement, or wait? This will depend upon the plan rules and your need for the money. In some plans the benefit may be greater if you wait until age 65. Additionally, some plans allow you the choice of taking an annuitized lifetime benefit (a monthly check) or taking a lump-sum payout. This decision should be made in the context of your overall financial situation and your ability to effectively manage a lump sum. Also, as this lump sum would be taxable, it is generally advisable for you to roll it over into a tax-deferred account such as an IRA. Lastly, if you have earned a pension benefit from a former employer, be sure to contact your old company to get all of the details and to make sure they have your current address and contact information.

Determine your Social Security benefits. The main decision is when to start taking your benefit. While you can start at age 62, there is a significant reduction versus waiting until your full retirement age. Further, if you wait until after full retirement age your benefit increase until age 70. If you are married the planning should involve both spouses' benefits. There are a number of sophisticated strategies surrounding couples and whose benefits to take when so planning can payoff for you here.

Take stock of all of your retirement financial resources. Many pre-retirees suffer from financial clutter. They have several old retirement plans from previous employers in IRAs or still in an account in the old plan. Their spouse has several old retirement plans. They each have a 401(k) with their current employer. There might be IRAs, a variable annuity, taxable investments, stocks, bonds, mutual funds, etc. There is a lot of financial "stuff" but it isn't organized into a coherent portfolio. It is vital that you take the steps to consolidate accounts and to get a handle on what you have and how and where it is invested.

Determine how much you will need from all sources to support your retirement lifestyle and compare this with your projected retirement income. While this might seem intuitive you'd be surprised how many pre-retirees within a few years of retirement haven't done this. Specifically look at your Social Security, any pension payments, any part-time income from work, consulting, etc. Compare these with the amount that you project that you will need to support your lifestyle on a monthly basis to determine how much you need to take from your various investment accounts, both taxable and tax-deferred (IRAs, etc.). If this gap amounts to more than 4 percent of your nest egg (as a quick rule of thumb) you may need to reassess your lifestyle needs or possibly plan on working a bit longer.

This is a very cursory "checklist" for pre-retirees within a few years or less of retirement. This might be a good point to engage the services of a fee-only financial advisor if you've never done a financial plan, or if your plan is out of date. Retirement can be a great stage of life, but proper planning is required to help ensure your success.

Roger Wohlner, CFP, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. Read more about Roger here.

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Nearing Retirement? 5 Must-Do Steps