Does it make sense while preparing for early retirement to be investing everything into tax-sheltered retirement accounts?
Perhaps I’m missing something, but it seems like in order to retire early and live off of my investments I have to invest in non-tax sheltered accounts.
Let’s use my situation as an example:
-Contributing $29k/yr to Roth TSP/IRAs.
-Not contributing anything non-tax sheltered accounts.
-Spouse is a student (no income), but we’re maxing out a spousal Roth IRA.
-~$200K in tax-sheltered investments (TSP/IRA).
-~$100k in non-tax sheltered investments.
My goal is to reach FI by age 42 (I’m 31), however, I can’t draw on any of my tax-sheltered accounts without penalties (59.5 age minimum). By age 42 I estimate I’ll have about ~$1m in total investments, but only ~$200k I’ll be able to withdraw without penalties from my taxable accounts.
For simplicity, let’s assume my economic situation doesn’t change and is stagnant over the next 11 years. Stretching $200,000 over a 17 year time frame will be tough, so does it make sense to be investing all $29,000 into tax sheltered retirement accounts?