Yes, if your plan allows you to take a distribution at age 59.5. Age 59.5 is when you will no longer have to pay a 10% tax on your distribution, but it does not mean that you can take a distribution from your plan at that age. Most plans do allow a 59.5 distribution, but it is not required. Check with your plan sponsor to see what your plan allows.

Know that you will still pay taxes on your distribution.

If you plan does allow a 59.5 distribution, your employment does not have to end for you to take advantage of that.

Sure, you should be able to start taking disbursements whenever you want when you're over 59.5. In most instances, you can opt to continue contributions too. This can create a nice residual cash stream, if you plan to phase out of your career and enter retirement.

Make sure to run some scenarios before hand to figure out how much you should be withdrawing to cover your needs. Don't make large withdrawals to cover unneeded expenditures. If you do, then you may fall short later on in your retirement years. Your taxes will be affected too.

Note that every 401k withdrawal automatically kicks up your tax liability, since income from these accounts is completely taxable. This may mean that you'll find these dollars in a higher tax bracket. If so, make sure you have enough money when filing your taxes to cover any additional payments to the IRS. Not all 401ks deduct state income taxes off the top. So, you may owe the state more too.

With these considerations, you should be fine. Feel free to withdraw, but preserve a safe withdrawal rate that keeps the bulk of the money for when you're no longer working at all.