Your retirement is far more than simply no longer showing up to work. It's about having the freedom to do what you want in life, and enough control over your personal finances to enjoy that freedom.

In the end, in fact, work may or may not be a part of your successful retirement. If you find a paid position that exactly matches what you want to do with your life, why not take it? Regardless of what you envision for your future, it's a good idea to start investing now for your retirement.

Don't let life interrupt your dreams
After all, virtually everything you do in this world costs money. That makes it tough to leave a decent paying but not all that much fun job. Throw a family, mortgage, health insurance, car payments, and skyrocketing food and energy prices in the mix, and it gets easy to see how you could get trapped in a job you don't like.

The stronger your retirement nest egg, the easier it is to break free of the lifestyle trap that can otherwise handcuff you to a job you no longer love. Even better, thanks to something known as a SEPP (Substantially Equal Periodic Payments) plan, you can start withdrawing your retirement money early, without getting socked by penalties.

What that means to you is simple: You can get the tax advantages of saving for retirement in qualified plans like 401(k)s, 403(b)s, and IRAs, and still keep the ability to get at your cash before a traditional retirement age. With SEPP plans, you have the ability to tap your retirement nest egg to help cover your costs of living while you pursue your dreams.

Save to break free
According to a recent paper from the Employee Benefit Research Institute, Americans are more worried about their ability to retire successfully than they have been since 2001. One of the biggest concerns is health insurance, with about half of workers finding themselves spending more on health care than they expected they would have to. Roughly 54% of retirees are more worried about their finances than they were at retirement, up from 40% just one year ago.

What if planned SEPP distributions from your retirement plan could cover the cost of private health insurance premiums? Wouldn't that make it easier to unlock the shackles of a job you may not love that much, and allow you to do what you really want? By utilizing SEPP early withdrawals to cover health insurance and a few other expenses, you could afford to continue working a job that you truly enjoy. Instead of the $2 million or more you might need to finance a full retirement, you might be able to break free on less than $400,000.

No, that won't completely replace a middle-class income for any appreciable length of time -- especially if you're too young to take Social Security or Medicare. By throwing off enough "automatic" income to cover some pretty hefty expenses, however, it will let you focus on what you want to do with your life. That's a nice switch from doing what you have to do just to cover the bills.

The catch...
While proper use of a SEPP can help you tap your retirement fund early to follow your heart to your dream job, there are strings attached. Perhaps most significantly, once you start taking SEPP withdrawals, you have to keep taking them for at least five years or until you turn 59 and a half -- whichever is longer.

As a result, if you're going to follow this strategy, you'll have to invest like a retiree once you start taking the distributions, even if you're still decades away from entirely calling it quits. As Motley Fool Rule Your Retirement advisor Robert Brokamp recently wrote for members of his service, "The job of a retiree's portfolio is to be sold off piece by piece, while also lasting as long as the retiree does."

How to make it work
In the same issue, Robert recommended a 60% stock, 40% fixed income allocation for retirees. It may seem backwards to hold that much in stocks while focusing on reducing volatility. Remember, though, that your ultimate goal is to preserve your purchasing power for the rest of your life. The fixed-income part of your portfolio smoothes out volatility, and the stock portion gives you the chance for growth you need to keep up with inflation.

For the stock portion of such a portfolio, Robert calls out several highly regarded mutual funds that give you exposure to some of the world's greatest companies, including:


Sample Holding

Vanguard 500 (VFINX)

Microsoft (NASDAQ:MSFT)

Vanguard Windsor II (VWNFX)


T Rowe Price Equity Income (PRFDX)

Eli Lilly (NYSE:LLY)

Royce Specialty Equity (RYSEX)

Lancaster Colony (NASDAQ:LANC)

Vanguard Small Cap Value Index (VISVX)

Walter Industries (NYSE:WLT)

Dodge & Cox International (DODFX)

Novartis (NYSE:NVS)

Vanguard REIT Index (VGSIX)

Simon Property Group (NYSE:SPG)

Are you ready to be free?
To be able to follow your dreams and spend the rest of your life doing what you love rather than what you have to do to pay the bills, you need to have a strong plan in place. At Rule Your Retirement, we can show you how the retirement tools at your disposal, like SEPPs, can help you reach those dreams. To see all the tools, tips, and resources we've assembled to enable you to retire successfully, take the next 30 days to check us out, free.

At the time of publication, Fool contributor Chuck Saletta owned shares of Microsoft. Eli Lilly and Lancaster Colony are Motley Fool Income Investor picks. Microsoft is a Motley Fool Inside Value recommendation. Vanguard Windsor II, Royce Special Equity, and Dodge & Cox International are Motley Fool Champion Funds picks. The Fool owns shares of Dodge & Cox International and has a disclosure policy.