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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ToughMother on May 11, 2013, 08:51:04 AM

Title: can't access $ until 65. include in savings/retirement calculation?
Post by: ToughMother on May 11, 2013, 08:51:04 AM

hey smart peeps,
i'm crunching numbers right now, using this tool among others: https://networthify.com/calculator/earlyretirement

anyway, i have a former employment-based account that i cannot access until i'm 65 (employer put most of the money in as a benefit, they made that rule).  that has most of my savings in it but no more is going in there.

my q is, should i NOT include that in my "current portfolio value" in the computation since the account won't throw off any money i can access prior to 65?

just trying to come up with some realistic goals/numbers/years to sweet sweet freedom.

thanks y'all.

Title: Re: can't access $ until 65. include in savings/retirement calculation?
Post by: destron on May 11, 2013, 09:33:28 AM

You will have to think about retirement in two phases:

Early FI -> age 65. You need enough money to make it this far (with some buffer), plus enough money left over that it combined with your inaccessible money is enough to live on until you die.

Age 65+ combine the leftovers from section one with the current amount.

It is probably easier to user http://firecalc.com to calculate this as you can add in a supplemental income source at a certain year.

Title: Re: can't access $ until 65. include in savings/retirement calculation?
Post by: fimoc on May 12, 2013, 07:55:50 AM

Don't forget about section 72(t)(2)(A)(iv) in the Internal Revenue Code (tax law) - assuming you do not invest any additional money into retirement accounts, you can schedule penalty-free withdrawals from IRAs before 59 1/2.  Remember that growing tax-free is a huge advantage, but also take into account how much your freedom means.