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Investor Protection Guide: Advice to Take Early Retirement

In this investment scheme, brokers may advise clients that they can retire early by cashing out their retirement accounts and adopt an aggressive growth investment strategy. The danger of this type of aggressive investment is that it exposes retirement-aged individuals to a great deal of risk because of the possibility of substantial fluctuation in the value of their portfolios. Promises of high returns, making as much money during retirement as when working, or a never-ending stream of investment returns are all red flags. Some of these early retirement plans or programs are advertised to take advantage of IRS loopholes, such as IRC 72t, for cashing out of retirement accounts early while avoiding penalties. While such loopholes do exist, there are remaining risks associated with early retirement and investors should understand these plans can expose them to unnecessary financial losses.

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