Author Topic: Planning for Early Retirement  (Read 2281 times)

CantGrowABeard

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Planning for Early Retirement
« on: December 26, 2014, 10:38:50 AM »
Hello,

Long time lurker of MMM and now that I'm graduating in a semester, I can start my path to early retirement.

However, I'm still pretty confused on where I should begin investing. I already have been putting money into my Roth IRA from my two part time jobs (after I have my living cost paid down). But once I get a full time job, should the order be
  • Max 401(k) until contribution
  • Max Roth/Traditional IRA
  • Then save for early retirement

Should the early retirement savings be done in a tax advantage account or in a taxable account that I contribute to after my 401(k) and IRA? After all, if I want to retire at the age of 40 something I won't be able to touch the 401(k) until I'm 59.5.

kpd905

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Re: Planning for Early Retirement
« Reply #1 on: December 26, 2014, 10:52:43 AM »
You can access the 401k at any age without penalty using either 72t method or Roth IRA conversions.

Depending on your income I would do this:

1. Contribute to 401k up to any company match
2. Pay off any debts over maybe 5-6%
3. Max out a Roth or Traditional IRA, based on income level
4. Max out 401k
5. Invest in taxable account with any extra.

If you have access to an HSA, that option might go between 3 and 4.

GlassStash

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Planning for Early Retirement
« Reply #2 on: December 27, 2014, 08:14:13 AM »
You can access the 401k at any age without penalty using either 72t method or Roth IRA conversions.

Depending on your income I would do this:

1. Contribute to 401k up to any company match
2. Pay off any debts over maybe 5-6%
3. Max out a Roth or Traditional IRA, based on income level
4. Max out 401k
5. Invest in taxable account with any extra.

If you have access to an HSA, that option might go between 3 and 4.

Spot on. With regard to step #2, my personal cutoff is 5%. Any loans below that are placed below tax-advantaged investing in my priority. But it's really to each their own.

P.S. I can't grow a beard irl. A blessing and a curse

TomTX

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Re: Planning for Early Retirement
« Reply #3 on: January 01, 2015, 11:09:32 AM »
You can access the 401k at any age without penalty using either 72t method or Roth IRA conversions.

Depending on your income I would do this:

1. Contribute to 401k up to any company match
2. Pay off any debts over maybe 5-6%
3. Max out a Roth or Traditional IRA, based on income level
4. Max out 401k
5. Invest in taxable account with any extra.

If you have access to an HSA, that option might go between 3 and 4.

Agreed, though for something other than student loans (ie - tax reduction without itemizing) I would put the debt payoff for stuff over 4-5%.

Also, I would just chunk everything into VTSAX until you have AT LEAST $50,000. Waiting til $250,000 is fine. Then start thinking about adding a small percentage of bond index investing.