Planning for retirement is more than just about saving money; it’s about knowing when to retire on your own terms, rather than being forced into it. While many Americans are now retiring, a significant number still feel uncertain about their financial future. Retirees with substantial savings in traditional IRAs or Roth IRAs may have a better chance of weathering financial insecurity, but even then, early withdrawals can come with steep penalties unless certain conditions are met.

In general, withdrawals made from these retirement accounts before the age of 59½ can result in a 10% penalty, in addition to taxes owed. For Roth IRAs, unless the account has been open for at least five years, early withdrawals are also subject to a penalty and taxes. However, there are exceptions that allow for penalty-free withdrawals in certain situations. Here are three ways to access funds from a retirement account without facing penalties:

1. Adoption or Childbirth Expenses

If you adopt a child, give birth, or have a child via surrogacy, you may be eligible to withdraw up to $5,000 from your retirement account without penalty. Each parent is allowed to take this amount, but the withdrawal must occur within one year of the child’s birth or the legal adoption finalization.

2. First-Time Home Purchase

Retirees can withdraw up to $10,000 from their retirement accounts to purchase, build, or rebuild a first home. The $10,000 must be used for the purpose of buying or improving a primary residence, and it must be spent within four months of the withdrawal. To qualify, you cannot have owned a home for the previous 24 months. Additionally, the funds can be used not just for the account holder, but also for a child, grandchild, or even a parent of the retiree.

3. Higher Education Expenses

Retirees can withdraw money from their retirement account to pay for higher education expenses without facing the 10% penalty, but only up to the amount needed for the tuition for one academic year. The funds can be used for the retiree’s own education or for the education of their children, grandchildren, great-grandchildren, or spouse. It’s important to note that this withdrawal must be used specifically for tuition and associated academic costs.

While early withdrawals can seem tempting, it’s crucial to remember the impact on your long-term savings and the potential penalties. Always carefully consider the financial implications and consult a financial advisor to ensure these withdrawals align with your retirement goals.