For long time readers, you probably recall that Mrs. Root of Good is still working even though I retired over a year and a half ago. Maybe you’re wondering how we’re able to jump on a plane and head to Mexico for seven weeks if she’s still working full time?
The answer is a three month paid sabbatical.
This week I’m dipping into the mailbag to answer some questions from a reader named Don about the Affordable Care Act subsidies and the income limits to watch out for if you don’t want to lose your subsidy or face an unexpected increase in health care costs.
In the past, I talked about the ACA (or “Obamacare”) making early retirement a lot easier where I went over two case studies. One case study was for an older couple approaching traditional retirement age. The second case study was my own situation of a family of five including three children.
In April, we spent quite a bit of money. We are ramping up for our seven week summer trip to Mexico which led to many expenses in excess of our routine monthly spending. As a result, our income of $2,125 didn’t quite keep up with our $4,549 of expenditures in April. In spite of that shortfall, our net worth climbed another $30,000 primarily due to investment returns.
I want to tell you a story about accessing tax-deferred funds in an IRA or 401k before age 59.5 without paying a penalty. But first I’m going full out White Fang on you.
A trapped animal will do just about anything to get free. When you get caught, normal rules of comportment and demeanor are sloughed off to make room for the demands of the primordial will to live. It’s all about survival. Adrenaline rushing, pumping through arteries and veins, clouding the judgment and dulling the pain, the wild animal will chew it’s own leg off to disengage itself from a trap. It’s all about survival.
You’ll have to keep reading to figure out what this has to do with accessing tax deferred accounts without paying a 10% penalty.