Look up the 72(t) rule relating to a 401k. You can retire early and start withdrawals at any age without penalty, as long as you continue the withdrawals for sufficient time (the longer of five years or until age 59.5.) This fixes the "too much in the 401k" situation.
Yes, but you don't have to spend it all. You could take just what you need to live on and invest the rest elsewhere. You'd give up some of the tax-deferral advantages of the 401k, of course.
(Perhaps you could roll over part of the 401k into an IRA first, and then take the rest as 72(t)?)
