Author Topic: Early retirement - where does the money come from?  (Read 3591 times)

golfer44

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Early retirement - where does the money come from?
« on: January 13, 2014, 07:17:28 PM »
Can't seem to find much of a definitive answer on this, but I've been wondering where the early retirement types are getting their money from. With the penalties for early withdrawals of 401ks and IRA non-contributions, where do they withdraw from?

Do they invest heavily in taxable accounts? Let's say I reach my goal net work of 750,000 by the time I'm 40, but it's in a mix of 401k (50%), Roth IRA (25%), and taxable (25%). What would MMM do?

If the answer is obvious, I apologize.. just a huge elephant in the corner for now.

arebelspy

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Re: Early retirement - where does the money come from?
« Reply #1 on: January 13, 2014, 07:26:01 PM »
Can't seem to find much of a definitive answer on this, but I've been wondering where the early retirement types are getting their money from. With the penalties for early withdrawals of 401ks and IRA non-contributions, where do they withdraw from?

Do they invest heavily in taxable accounts? Let's say I reach my goal net work of 750,000 by the time I'm 40, but it's in a mix of 401k (50%), Roth IRA (25%), and taxable (25%). What would MMM do?

If the answer is obvious, I apologize.. just a huge elephant in the corner for now.

Read this, absorb it, and come back with any questions: http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/

:)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

golfer44

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Re: Early retirement - where does the money come from?
« Reply #2 on: January 13, 2014, 07:28:03 PM »
Can't seem to find much of a definitive answer on this, but I've been wondering where the early retirement types are getting their money from. With the penalties for early withdrawals of 401ks and IRA non-contributions, where do they withdraw from?

Do they invest heavily in taxable accounts? Let's say I reach my goal net work of 750,000 by the time I'm 40, but it's in a mix of 401k (50%), Roth IRA (25%), and taxable (25%). What would MMM do?

If the answer is obvious, I apologize.. just a huge elephant in the corner for now.

Read this, absorb it, and come back with any questions: http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/

:)

Thank you sir! Will report back soon.

dmdunca

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Re: Early retirement - where does the money come from?
« Reply #3 on: January 13, 2014, 07:48:34 PM »
I frequent two boards with a number of early retirees; the Bogleheads and FIRE http://www.early-retirement.org

It is common to have enough saved in taxable investments to live off of before drawing SS and/or taking withdrawals from traditional IRA accounts.  Also, during those years, since their taxable income is so low, they do conversions to Roth IRAs.

some pretty sharp people on both boards.


Eric

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Re: Early retirement - where does the money come from?
« Reply #4 on: January 13, 2014, 08:22:19 PM »
Where does the money come from?

They earn it

(said in best John Houseman voice)

JD2001svt

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Re: Early retirement - where does the money come from?
« Reply #5 on: January 14, 2014, 09:00:26 AM »
Been wondering the exact same thing!  Thanks for the question and the provided article!