Author Topic: Old retirement and young retirement  (Read 2835 times)

mozar

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Old retirement and young retirement
« on: April 05, 2014, 02:14:10 PM »
I can't find the thread now but I was reading about someone who was wondering how to allocate savings to get to FI as fast as possible.

My plan is to save $1,458 plus 200 a month in my 401k and then 1,300 a month into a vanguard index fund. It will take me 15 years to get to my target amounts. This will mean my money will be split into two accounts and I would live off the index funds until it was time to tap the 401k.

Now the money would compound faster if I could put it all in one pot. I would get to FI in 13 years. But if I were to put more than my 17500 and employer match into the 401k I will pay a penalty. Here is an article about it. http://money.msn.com/saving-money-tips/post--what-if-you-over-contribute-to-a-401k
Is there something better I could do?
Thanks.

Gin1984

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Re: Old retirement and young retirement
« Reply #1 on: April 05, 2014, 02:24:33 PM »
Can you put money in a Roth?

mozar

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Re: Old retirement and young retirement
« Reply #2 on: April 05, 2014, 02:34:50 PM »
There is also an excess contribution penalty for roth.
What do you mean serpentstooth? My 401k is with shwab. Are you saying I could add another bucket with them but they will keep all the money in one place?

Gin1984

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Re: Old retirement and young retirement
« Reply #3 on: April 05, 2014, 02:48:05 PM »
There is also an excess contribution penalty for roth.
What do you mean serpentstooth? My 401k is with shwab. Are you saying I could add another bucket with them but they will keep all the money in one place?
I am not saying you should put ALL your money in a Roth, I am asking if you can because between a taxable account and a Roth, the Roth is better.

Gin1984

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Re: Old retirement and young retirement
« Reply #4 on: April 05, 2014, 03:07:14 PM »
I found the thread: http://www.mrmoneymustache.com/forum/ask-a-mustachian/'two-pots-of-money'-approach-to-determine-withdrawal-rates/
It sound like they are saying ER is faster if all the money goes in one pot. I could be wrong.
No they were not saying that at all.  They were saying that you can count it as one pot for determining how much to pull out.  Where you put it won't affect too much.  Just max everything out.

arebelspy

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Re: Old retirement and young retirement
« Reply #5 on: April 05, 2014, 03:08:47 PM »
I found the thread: http://www.mrmoneymustache.com/forum/ask-a-mustachian/'two-pots-of-money'-approach-to-determine-withdrawal-rates/
It sound like they are saying ER is faster if all the money goes in one pot. I could be wrong.

Yeah, that's not the case.

$1000 in 100 different accounts compounds the same as 100,000 in one account, assuming the rates/fees are all the same.
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mozar

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Re: Old retirement and young retirement
« Reply #6 on: April 05, 2014, 05:26:03 PM »
Oh, ok.