Retiring before 59½: the bridge years

Early retirement has two bridge problems: getting at retirement money without the 10% penalty (/v1/retirement/sepp), and buying health insurance before Medicare without giving the subsidy back (/v1/healthcare/aca-optimize). Both are pure calculation problems.

1 · Penalty-free access: the 72(t) SEPP schedule

A 50-year-old with a $500,000 IRA. Substantially Equal Periodic Payments under §72(t) allow penalty-free withdrawals — if the schedule follows one of the IRS methods, at a rate no higher than the 120%-AFR ceiling, for the longer of 5 years or to age 59½.

curl -X POST https://api.numeratica.com/v1/retirement/sepp \
  -H "Authorization: Bearer nmr_sk_test_xxx" \
  -H "Content-Type: application/json" \
  -d '{
    "account_balance": 500000,
    "age": 50,
    "interest_rate": 0.05
  }'

{
  "result_id": "sepp_e3c83e05bc5f7ead",
  "engine_version": "sepp-1.0.0",
  "result": {
    "rmd_method":          { "annual_payment": 13812.15, "factor": 36.2, "fixed": false },
    "amortization_method": { "annual_payment": 30156.12, "factor": 16.58, "fixed": true },
    "recommended":         { "name": "fixed_amortization", "annual_payment": 30156.12 },
    "minimum_duration_years": 9.5,          /* to 59½ — the longer of 5 yrs or age 59½ */
    "end_age": 59.5,
    "bust_penalty_rate": 0.1,
    "max_retroactive_penalty": 30156.12     /* 10 distributions' worth of 10%, at once */
  },
  "disclaimer": "Calculation engine output for informational purposes only; not tax or financial advice."
}

Fixed amortization pays $30,156/year — more than double the RMD method's $13,812 — but the schedule is locked for 9.5 years, and busting it retroactively owes every skipped 10% at once: up to $30,156 here (ten annual distributions' worth). That asymmetry is why the schedule, not the rate, is the decision.

2 · Health insurance: fund spending, protect the subsidy

The same retiree at 60 needs $60,000 of spending with taxable, deferred, and Roth buckets available. The optimizer picks the draw mix that minimizes MAGI: an all-Roth year keeps MAGI at $0 and captures the full $11,000 premium tax credit, versus $4,767 of net premium + tax under a naive proportional draw (result.savings, result_id acaopt_c6767ce36a7a54e7) — with $62,600 of headroom to the 2026 400%-FPL cliff for opportunistic Roth conversions.

3 · Render it

The SEPP decision card.

<div style="font-family:-apple-system,Segoe UI,Roboto,Helvetica,Arial,sans-serif;color:#1a2230;max-width:600px">
  <div style="font-size:14px;color:#5b6675;margin-bottom:8px">72(t) SEPP on a $500,000 IRA at age 50 · 5% rate</div>
  <div style="display:grid;grid-template-columns:1fr 1fr;gap:10px">
    <div style="border:1px solid #e6e9ef;border-radius:10px;padding:12px">
      <div style="font-size:12px;color:#5b6675">RMD method · recalculates yearly</div>
      <div style="font-size:22px;font-weight:700">$13,812<span style="font-size:12px;font-weight:400;color:#5b6675">/yr</span></div>
      <div style="font-size:12px;color:#5b6675;margin-top:4px">Smaller, flexible-ish</div>
    </div>
    <div style="border:2px solid #1d4ed8;border-radius:10px;padding:12px">
      <div style="font-size:12px;color:#1d4ed8;font-weight:600">Fixed amortization · max draw</div>
      <div style="font-size:22px;font-weight:700">$30,156<span style="font-size:12px;font-weight:400;color:#5b6675">/yr</span></div>
      <div style="font-size:12px;color:#5b6675;margin-top:4px">Locked to age 59½ (9.5 yrs)</div>
    </div>
  </div>
  <div style="margin-top:10px;border:1px solid #dc2626;background:#fef2f2;border-radius:10px;padding:12px">
    <div style="font-size:12px;color:#dc2626;font-weight:600">If the schedule busts</div>
    <div style="font-size:14px;margin-top:2px">Retroactive 10% on every distribution taken — up to <strong>$30,156</strong> here</div>
  </div>
  <div style="color:#5b6675;font-size:12px;margin-top:6px">result_id sepp_e3c83e05bc5f7ead · rate capped at the 120% mid-term AFR · not tax advice</div>
</div>

The rest of the early-retirement stack: the readiness check for whether the plan works at all, /v1/portfolio/glidepath for the allocation on the way there (see portfolio maintenance), and the marginal-rate map for conversion planning in the low-income bridge years. At the far end of the bridge: /v1/medicare/late-enrollment-penalty prices what delaying Medicare past 65 costs for life.

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