I've been questioning what my approach to my 401K account through my employer will be.
If my savings, salary, and stock market performance assumptions hold true, I'll be financially independent (according to my own needs) in 5-6 years. My salary+bonus next year will be $131K and I currently contribute the minimum amount (5%) needed to maximize my employer match (1.25%). My MO is to take income net of expenses next year and to put it into my index investment fund instead of increasing my 401K contribution.
Here's the thing: after 6 years, my passive income potential (with no reinvestment) would be $91K, which isn't that much less than my 2017 salary in terms of tax brackets. Now, I'll be charged a 10% penalty (I'll be 35) for pulling money out of my 401K. If I wanted to pool my 401k assets into my general investment fund to live off of, I'd take the 10% haircut as soon as I retired.
Am I off base for thinking that 401Ks are only beneficial to those planning on retiring after 59.5? I mean, I don't want to lose the employer match, but I think I'm better off with my personal fund for my real savings.