You've spent years socking money away month after month, and now you're ready to access the cash you've accumulated in your IRA or 401(k). But withdrawing funds at the wrong time comes with consequences that you'll need to consider before you start tapping those accounts. With that in mind, here are a couple of reasons to consider waiting before taking money out of a retirement plan.

1. You're not yet 59 1/2

Your IRA or 401(k) is supposed to serve as a source of retirement income, so the IRS doesn't want you to start withdrawing funds until you're at an age where you might conceivably retire. In the agency's mind, that age is 59 1/2, which means that if you access your money before then, you'll incur a 10% early-withdrawal penalty on whatever amount you remove.

Senior couple looking at documents


There are some exceptions to this rule. If you withdraw up to $10,000 from your IRA before 59 1/2 to purchase a home for the first time or use your money to pay for higher education, you won't get hit with that 10% penalty. Similarly, if you have a 401(k) but then separate from the company sponsoring it in the year you turn 55 or later, you can take penalty-free withdrawals from that plan, even if you're not yet 59 1/2.

Finally, if you're housing your savings in a Roth IRA, you can withdraw your principal contributions at an early age without penalty. (The logic behind this is that you never received a tax break on that money, so there's no penalty for removing it early.) Otherwise, you'll need to wait until 59 1/2 to avoid being penalized.

2. You have the option to keep working

Maybe you're past age 59 1/2 and are ready to quit the daily grind and live off Social Security and your savings, instead. If your retirement fund is sizable, that's not a bad plan. But most workers are way behind on savings. The average household aged 56 to 61 has $163,577 socked away, according to the Economic Policy Institute.

But when we apply a yearly withdrawal rate from savings of 4%, which has long been the standard, that gives us just $6,543 of annual income. Then, when we factor in the average yearly Social Security benefit at present, that figure climbs to about $23,400. Again, not a whole lot.

Therefore, if you're looking at limited savings, you're better off letting them grow, provided you have the option to stay at your job. Of course, that option will hinge on your physical ability to keep working, as well as your company's willingness to keep you on board.

Understand, however, that for every additional year you work, you not only get a chance to pad your retirement savings but avoid dipping into the savings you have. And the more you reduce the number of years during which you're living off savings, the more you'll be able to withdraw each year. Incidentally, working longer might also enable you to grow your Social Security benefits, thereby boosting that income stream, as well.

Don't wait too long to start taking withdrawals...

While tapping your retirement funds prematurely could result in penalties or cause you to rapidly deplete your nest egg, you don't want to go to the other extreme, either. Unless you're keeping your savings in a Roth IRA, you must begin taking required minimum distributions (RMDs) once you turn 70 1/2. Specifically, your first RMD is due by April 1 of the year following the year in which you turn 70 1/2, while all subsequent RMDs are due by the end of their respective calendar years. If you don't take your RMDs on schedule, you'll face a penalty equal to 50% of the amount you fail to withdraw, which is way worse than the penalty for tapping your retirement funds before 59 1/2.

Your RMDs will be a function of your savings balance coupled with your life expectancy, and you can use our RMD calculator to get a sense of what you'll be on the hook for. Either way, be sure to have those RMD deadlines on your radar to avoid losing money.

The timing of when you start to withdraw from savings is crucial to your financial health throughout retirement. Therefore, don't just access those funds on a whim, but rather, develop a plan for when you'll start taking withdrawals and at what rate.

At the same time, don't neglect your RMDs when they start to come due. This way, you'll make the most of your savings without falling victim to needless penalties along the way.