Love the Mad Fientist, all his podcasts, etc., (he's awesome!) BUT the more I look at the numbers for the Roth conversion ladder, the more I realize that it really only works well if you can pour huge amounts of $ into a 401k in the first place.
http://www.madfientist.com/how-to-access-retirement-funds-early/I say this because you can save about 3 times as much money each year in a 401k as you can into an IRA, so if you don't have access to a 401k, you can only contribute $5,500 per year (assume a single person), so after let's say 20 years of maxing out your IRA, you only have $110,000 in contributions, which are the only part of your Roth that you can withdraw penalty-free before age 59.5. Approximately $110,000 in contributions, assuming you just withdraw $24,000 per year to live (very low), doesn't even give you 5 years of ER.
Whereas if you would have been able to max out a 401k for 20 years, (about $370,000) and then convert to IRA and then convert to Roth, the entire amount from your 401K becomes a "contribution," right? Meaning that you could withdraw $24,000, giving you 15 years of ER while you let your interest keep accumulating over that time.
So I guess my question is, can anyone really use the Roth conversion ladder without having a 401k as the basis of it all? Or does it just become a thinner leg of your stool without a 401k, forcing you to focus more on taxable investments?
I'm still a newbie, so if I'm totally off with my reasoning, please show me the light. I'm honestly confused about this.