Question: “I’m 57 years old and I would like to retire now. I have $300K in my 401(k), $30K in the bank and I still owe $99K and $17K on my credit cards. I have $2K-$3K in some savings accounts and I just got an IUL. Who can help me make sure I can retire without having to worry?”

Answer: You’ll need to do a deep dive into your current and expected future finances to get a clear picture of whether and/or when you can retire — and yes, a financial planner would likely be of help, pros say. You can use this free tool to get matched to financial planners, from our ad partner SmartAsset, as well as sites like CFP Board and NAPFA.

But before we get into financial planners, let’s dive into your situation. First, there are important details not included here. “What will your monthly spending need to be and what is the cash value of the IUL policy? These are key considerations that must be factored into a decision on whether retirement now is possible or not,” says Derek Jones, chartered financial analyst at Scratch Capital.

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Whether retirement is feasible now depends on your sources of guaranteed income, your expected mandatory and discretionary expenses in retirement, the account value in your IUL policy and any home equity, says Tom Buckingman, chief growth officer at Nassau Financial Group. “I know people who have retired comfortably with half as much in assets but strong home equity and Social Security benefits. On the flip side, there are people with more than one million in assets who would not be able to maintain their spending habits in retirement,” says Buckingham.

For her part, Michelle Connell, president at Portia Capital Management, says retirement is not feasible now. “If one was to assume that the credit card debt of $116,000 had a very low interest rate of 12%, the yearly interest payment paid by you would be close to $14,000. Compare that to the amount of income that can be depended upon from the $300,000 in the 401(k). The rule of thumb for retirement distributions is 4%, which would generate $12,000 per year in this case. That’s less than is being paid on the credit card balance. Even if you assume the $300,000 could earn a higher rate, say 6%, you still only make $18,000 per year,” says Connell.

The main problem you’re facing is that you have a debt to equity ratio of 35% which is too high given the low amount of investments held in the 401(k). “If you retire now with this debt to equity ratio, your net cash flow will be negative,” says Connell.

Tackling the credit card debt

Perhaps the biggest flag here is your credit card debt. “If you stop working, your income stream stops and you’ll need to figure out how to service the debt. Because credit card debt carries such high interest rates, it would severely hurt your long-term prospects to simply make minimum payments and allow the interest on the debt to compound. Since the earliest you can file for Social Security is age 62, you will have to rely on your financial assets to support all of your debt service and additional spending needs for at least 5 years,” says Jones.

One option to pay down the debt would be to take a loan from the cash value of your IUL policy. “This loan is tax-free and always will be assuming the loan gets paid back at some point in time, either with the additional premiums or market growth of the remaining cash value and the policy doesn’t lapse,” says Jones. That said, taking a loan against your IUL policy comes with potential drawbacks if you aren’t able to pay the loan back. “The worst-case scenario is that the policy will lapse, and a portion of the original loan amount becomes taxable,” says Jones.

Connell recommends taking $17,000 from the $30,000 in the bank and paying off the $17,000 credit card immediately. “Hold onto the rest for an emergency cash fund. To avoid taking a discount from Social Security, be at least age 65 when you enroll. If possible, delay taking Social Security until age 70 [because] for each year delayed between 65 and 70, you increase your payout by 8%,” says Connell.

What to do about that IUL

Another red flag? The IUL. “You need low expenses and cash flow flexibility, whereas an IUL requires high premiums, long funding periods, and a delayed breakeven to access cahs value. It sounds like you didn’t buy an IUL, but were instead sold an IUL, which is an unsuitable insurance product in your situation,” says certified financial planner Cody Garrett at Measure Twice Financial.

Other issues to consider

Another important thing to consider is healthcare. For early retirees, Whitney Stidom at eHealth says making informed health insurance decisions is crucial, given the average person spends nearly $200,000 in healthcare costs during their golden years. “This information is timely as millions of Americans are making health benefit decisions for 2026 during the fall’s open enrollment season and with the enhanced subsidies set to expire, it’s crucial that early retirees compare plans and make strategic coverage decisions now,” says Stidom.

Since you would terminate employment in or after the year you turn 55, you may be able to use the Rule of 55, which allows 401(k) distributions before age 59 ½ without the 10% early withdrawal penalty, says Garrett. The only downside of the Rule of 55 is the requirement for 20% mandatory federal income tax withholding.

One thing that can reduce financial risk during retirement is guaranteed income, like Social Security, pension or annuity benefits. “Predictable sources of income reduce volatility and especially the risk of outliving your assets. Based on the profile provided, my top priority would be to consolidate credit card debt at the lowest possible interest rate and reduce debt from current levels before retiring,” says Buckingham.

What to do next

Going forward, create a budget. “Include payments for any of the assets on your balance sheet. Include potential increases in healthcare expenses as you age. Also keep in mind at some point you’re going to need to buy another vehicle, even a used one. If you’re 57, the vehicle you currently own is not going to last until you’re 80 or older. Also include payments for the IUL. You’ll probably be paying those for the duration of your retirement. Finally, determine how much Social Security you’ll receive at different ages. Once you have a complete budget, determine if your income exceeds your expenses with a cushion,” says Connell. 

To help you plot out a successful retirement, you should consider working with a fiduciary retirement adviser who is licensed, experienced and well-reviewed, says Jordan Mangaliman at GoldLine Wealth Management. CFPs are the golden standard in financial planning as they complete extensive education requirements, pass exams, perform thousands of hour of work-related experience and uphold a fiduciary duty to earn their designation.

Many qualified advisers offer hourly or project-based services, so you can work with a pro to tackle specific questions or to have a comprehensive plan created. Hourly planners tend to charge between $200 and $500 while project-based planners cost between $1,500 and $7,500 per project depending on the scope of work and the complexity of your finances. You can use this free tool to get matched to financial planners, from our ad partner SmartAsset, as well as sites like CFP Board and NAPFA.

Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.

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