Author Topic: Early Retirement. Where do I hold money?  (Read 1282 times)

Edwards

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Early Retirement. Where do I hold money?
« on: August 31, 2019, 02:44:11 PM »
I plan on retiring early (at approx. 40-45 years old), so I have always been worried about putting my money in a standard retirement program and incurring early withdrawal penalties.  Due to this, a majority of my savings is located in a Vanguard brokerage account (VTSAX) while about 25% is in Roth and Traditional IRAs. 

However, I am starting to feel like I am completely missing out on tax advantages by having a majority of my retirement funds sitting in a brokerage account.  I'd like to take advantage of the tax benefits but don't want to be hit with fees when I start withdrawing in my 40s.

Are there better options for someone who plans to retire 15 years earlier than 59.5?

If you need any additional information to clarify the situation please let me know.  I would be happy to provide it.  Thanks everyone.

EvenSteven

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Re: Early Retirement. Where do I hold money?
« Reply #1 on: August 31, 2019, 02:55:56 PM »
Sticky at the top of this forum:

https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/


No need to pay fees when taking out money from your retirement accounts.

Edwards

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Re: Early Retirement. Where do I hold money?
« Reply #2 on: August 31, 2019, 03:37:52 PM »
Wow.
I am a moron.  Thanks!

markbike528CBX

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Re: Early Retirement. Where do I hold money?
« Reply #3 on: September 01, 2019, 08:21:27 AM »
Putting money in the tax-sheltered (401k, Traditional IRA) helps shelter _Current Income_.

Having a lot in taxable investments is NOT that big of a tax hit when FIRED.
As long as your FIRE expenses (and therefore income) is not big then long term capital gains and dividends are taxed at 0%
(taxable income <39375 single, 78750 married filing jointly).
Taxable income is gross minus deduction
Standard MFJ is 24,000 so  total income could be ~100K and still pay no taxes.

So far I'm on a path for 0 federal taxes this year, at less than the above limits.

marty998

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Re: Early Retirement. Where do I hold money?
« Reply #4 on: September 03, 2019, 03:23:32 PM »
Even if you retire at 40, if you still plan on being alive at 65 and beyond won't you need money for that period of your life?