Roth IRA/Portfolio Withdrawal Questions

[cahnerjh96]

Hello all!
My name is Cahner, I am still relatively new to the pursuit of Financial Independence.  There are really only 2 parts of the puzzle that I am having some difficulty understanding. 

First thing is the Roth IRA portion.  I here everybody harping on it and I have opened one specifically following the principles from The Simple Path to Wealth by JL Collins.  It doesn't make sense to me to invest in a Roth IRA if I am planning on retiring well before age 59 1/2. 

Second thing, could someone please enlighten me on the process of actually withdrawing the 4% from your actual portfolio.  My portfolio will be strictly through VTSAX.  I understand that allocation of stocks and bonds, but how do you actually withdrawal the 4% that you would be living off of?  Is it by a monthly basis, annual, what is the process?

Any help is greatly appreciated.  Thank you all so much.

[RWD]

Hello all!
My name is Cahner, I am still relatively new to the pursuit of Financial Independence.  There are really only 2 parts of the puzzle that I am having some difficulty understanding.

Welcome!

First thing is the Roth IRA portion.  I here everybody harping on it and I have opened one specifically following the principles from The Simple Path to Wealth by JL Collins.  It doesn't make sense to me to invest in a Roth IRA if I am planning on retiring well before age 59 1/2. 

You can withdraw contributions to a Roth IRA at any age. Only the gains have to wait. There are also ways to get money out of pre-tax retirement type accounts before the usual "retirement age." See this sticky thread for more info:
https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

Second thing, could someone please enlighten me on the process of actually withdrawing the 4% from your actual portfolio.  My portfolio will be strictly through VTSAX.  I understand that allocation of stocks and bonds, but how do you actually withdrawal the 4% that you would be living off of?  Is it by a monthly basis, annual, what is the process?

Any help is greatly appreciated.  Thank you all so much.

When you are ready to start living off your investments (i.e. not making a regular income) you can turn off reinvesting dividends which will get you the first 1-2% without having to sell anything. When you sell off the rest is mostly personal preference. Once a year is fine though monthly is probably going to be a bit smoother. Which accounts you withdraw from depends on your tax strategy. See some similar recent threads:
https://forum.mrmoneymustache.com/investor-alley/how-to-draw-your-funds-4-rule-in-action/
https://forum.mrmoneymustache.com/investor-alley/how-to-choose-a-withdrawal-order-once-fire'd/

[MustacheAndaHalf]

Investing in a Roth IRA allows you to pay tax today, instead of in the future when tax rates are uncertain.  It also has a "what you see is what you get" amount, unlike pre-tax Traditional IRAs.  If the tax situation makes it close, I'd favor the Roth IRA.

In retirement if you rebalance your portfolio, that often involves selling stocks to buy bonds.  Besides the dividends RWD mentioned, you can pull a few percent out of your portfolio when you rebalance.  You sell some for living expenses, and the rest helps reset your percentage of stocks and bonds.

[Retireatee1]

Roth IRAs can also provide for tax diversification in case tax rates increase in the future

[MDM]

...I am planning on retiring well before age 59 1/2. 

Given only that information, deductible traditional contributions are likely to be better for you than Roth.

See Traditional versus Roth - Bogleheads for more.