401K vs Cash in Hand?

[brane]

My husband and I are trying to retire mustachian style in the next 5 years or so.
We are both currently maxing out our 401k (pre and post tax) as recommended by... well... everyone. We are currently in our mid 30's and work together for an employer who matches the first 6% of our 401k contribution.
We can't help but wonder, though, if it wouldn't be smarter to save about half of what's going into our 401k account in a cash on hand account instead of locking our money into an account we can't access until we are 62.  How are we supposed to retire early and live off the interest of our non-401k investments/savings if the majority of our savings is going into our 401k and untouchable for such a long time? We have to admit we haven't read all the posts on the MMM blog yet so if this is covered a link to a specific article would be appreciated. We did a search but couldn't find one. Or if you have the time and the good will to respond that would be appreciated also. If you need any more info from us ask away.

Thank you for your time AND your advice. May the money be with you.

-Brane

[the fixer]

The age is actually 59.5, and there are tax loopholes that allow you to access 401(k) money earlier than this. Do a search for "Roth pipeline."

MMM article: http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

The gist is that you will need at least 5 years' spending money in taxable accounts, but after that you can withdraw previous years' Roth rollovers.

[brane]

Thanks for the link Fixer. Very much appreciated!

[beltim]

If you don't want to depend on the Roth pipeline loophole (or if it changes), there are also substantially equal periodic payments (SEPP or 72(t) withdrawals) that you can start at any time as long as you commit to taking those distributions for 5 years or until age 59.5, whichever is longer.  For more info: http://www.wiserinvestor.com/irs72t/

[Cheddar Stacker]

Fixer & Beltim already hit it on the head and either strategy can work well in deifferent scenarios. For the laddering system you'll need to build up some after-tax funds to use since you can't access the principal for 5 years. This can be done with either direct Roth contributions, back door Roth contributions, or in an after-tax brokerage account.

Any way you do it, make sure you read the links below. Since you're new to MMM you likely haven't stumbled accross these yet, and they're worth understanding given your early retirement age and 20+ years to social security income. These aren't MMM posts, but they're MMM approved as one of the links at the bottom of his website is the madfientist.

http://www.madfientist.com/retire-even-earlier/
http://www.gocurrycracker.com/never-pay-taxes-again/
http://www.madfientist.com/tax-gain-harvesting/
http://www.madfientist.com/tax-loss-harvesting/