Early retirees typically rely on their own savings and investments to be self-supporting, either indefinitely or until they begin receiving external support. Early retirement can also be used as a euphemistic term for being terminated from employment before typical retirement age. Savings needed While conventional wisdom has it that one can retire and take 7% or more out of a portfolio year after year, this strategy would not have worked very often in the past. The chart at the right shows the year-to-year portfolio balances after taking $35,000 (and adjusting for inflation) from a $750,000 portfolio every year for 30 years, starting in 1973 (red line), 1974 (blue line), or 1975 (green line). While the overall market conditions and inflation affected all three about the same (since all three experienced exactly the same conditions between 1975 and 2003), the chance of making the funds last for 30 years depended heavily on what happened to the stock market in the first few years. Those contemplating early retirement will want to know if they have enough to survive possible bear markets such as the one that would cause the hypothetical 1973 retiree's fund to be exhausted after only 20 years. The history of the US stock market shows that one would need to live on about 4% of the initial portfolio per year to ensure that the portfolio is not depleted before the end of the retirement; this rule of thumb is a summary of one conclusion of the Trinity study, though the report is more nuanced and the conclusions and very approach have been heavily criticized (see Trinity study for details). This allows for increasing the withdrawals with inflation to maintain a consistent spending ability throughout the retirement, and to continue making withdrawals even in dramatic and prolonged bear markets. (The 4% figure does not assume any pension or change in spending levels throughout the retirement.) When retiring prior to age , there is a 10% IRS penalty on withdrawals from a retirement plan such as a 401(k) plan or a Traditional IRA. Exceptions apply under certain circumstances. At age 59 and six months, the penalty-free status is achieved and the 10% IRS penalty no longer applies. To avoid the 10% penalty prior to age , a person should consult a lawyer about the use of IRS rule 72 T. This rule must be applied for with the IRS. It allows