Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How to retire early with all $ in IRA/401(k)?
Old 11-02-2003, 10:48 AM   #1
Confused about dryer sheets
 
Join Date: Nov 2003
Posts: 9
How to retire early with all $ in IRA/401(k)?

I'm crossposting this on the simpleliving.net discussion forums under the "Money" heading.

-----------------------------
First the basics: I'm 28 and trying for early retirement. I make $36,500 per year and have no debt. I rent an apt. I'm maxing out Roth IRA and 401(k)--30% per year to 401(k) with 5% employer match. I minimize expenses and am a good saver.

Current IRA/401(k) balance $22K total (100% Vanguard Index 500)
Money market balance $9K (thinking about buying some I-bonds)
$3K in taxable 500 index fund
Money market balance is maintained for emergency expenses and to save for down payment on house if I decide to purchase.

At my current respectable but not extremely high income level, my total yearly retirement account contributions (~$13K) make up a significant portion of my total investment dollars. I "only" have $300/month to invest outside of IRA/401(k).

My question/concern is: At say age 40, if I have enough to retire, the vast majority of it will be in retirement accounts that I can't access without penalty till I'm much older. What to do?

If I fully fund IRA/401(k) and put the other $300/month in money market toward a down payment, then I'm not doing any retirement investing outside of my retirement account. Is this a bad thing since I want to retire early?
__________________

__________________
lwbarry is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: How to retire early with all $ in IRA/401(k)?
Old 11-02-2003, 04:16 PM   #2
Full time employment: Posting here.
 
Join Date: Sep 2003
Posts: 902
Re: How to retire early with all $ in IRA/401(k)?

You can withdraw funds from your retirement plans without penalty at an early age, but it requires that you take substantially equal periodic payments (SEPP). In other words, set up a regular withdrawal schedule based on rather complex IRS rules. But it is definitely doable. Here's some info:

http://www.retireearlyhomepage.com/wdraw59.html
__________________

__________________
Bob_Smith is offline   Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-02-2003, 04:33 PM   #3
 
Posts: n/a
Re: How to retire early with all $ in IRA/401(k)?

lwb,

I would not sweat this detail right now. You are only 28 and in the accumulation phase right now. Your mission is to maximize savings and minimize taxes. So I would put everything in a tax deferred account.

Also realize that life will change rather drastically by the time you reach 40. And although 40 may seem like a long way off, no one really retires at 40. -- 50 maybe, but 55 is early and 60 is still early. so don't sweat the small stuff and just continue to park your savings in areas that won't be taxed.
__________________
  Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-03-2003, 05:08 PM   #4
Confused about dryer sheets
 
Join Date: Nov 2003
Posts: 9
Re: How to retire early with all $ in IRA/401(k)?

Thanks all! Cutthroat, that is great advice not to think too far ahead. Sometimes I get too "stressed out" over trying to figure all this stuff out when you're right, who knows what life will look like in 10 or 20 years, much less next week. I will just keep saving and let the rest take care of itself.
__________________
lwbarry is offline   Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-05-2003, 03:44 PM   #5
 
Posts: n/a
Re: How to retire early with all $ in IRA/401(k)?

I am currently considering adjusting my IRA money.
I have it split 50/50 between "investment grade" bonds
and an aggressive bond fund. Returns are good, but
an increase in interest rates will drive the values down.
Psychologically, I have trouble dealing with that. I would
like to put 50% into CDs but with rates so low I can't
find anything. Money market might be okay, but that is
only a temp. fix. It's a puzzlement. Hate to move the whole thing (again) but that may be where I end up.
__________________
  Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-06-2003, 07:15 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: How to retire early with all $ in IRA/401(k)?

"Psychologically,I have trouble dealing with that". Me too - having an incurable habit of watching markets since 1965 or 66. My shrink is Benjamin Grhham - I have a dollar bill bookmark on page 108 of the 1972 edition of The Intelligent Investor - Chapter 8 - the investor and market fluctations - its helped me 'do nothing' periodically over the years.

Since I'm a balanced index kind of guy, my advice on bonds is best discounted.

But I will say this - I mentally try to split my ER portfolio(balanced index IRA) and my 'income bucket'. The market value of the income bucket fluctuates(hence the book) - also in a former life I was an engineer so I try to view it as a income machine. It contains stuff like Con. ED., Verizon, Exxon, National Fuel Gas, vg REIT Inex, vg High Yeild Corp, Gabelli conv bond,etc.
I run it as an inflation adjusted income in FIREcalc.

Maybe the bond cats can post some good info. I can relate to the mental - I still watch the markets almost every day.


__________________
unclemick is offline   Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-06-2003, 07:20 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: How to retire early with all $ in IRA/401(k)?

Sorry - it's Benjamin Graham
__________________
unclemick is offline   Reply With Quote
Re: How to retire early with all $ in IRA/401(k)?
Old 11-06-2003, 10:12 AM   #8
Recycles dryer sheets
 
Join Date: Dec 2002
Posts: 290
Re: How to retire early with all $ in IRA/401(k)?

unclemick:

Sorry - it's Benjamin Graham

I liked the way that you spelled it the first time. It looked as if you were trying to get a dirty word past the censors.

The more that I think about it, Benjamin Graham's name is a dirty word to a lot of people who want our money.

I thought that it was a great commentary!

Have fun.

John R.
__________________

__________________
JWR1945 is offline   Reply With Quote
Reply

Tags
ira


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
500 search phrases for 2006 dory36 Other topics 2 01-16-2007 08:00 AM
The Retire Early Home Page Old Admin Forum Admin 79 05-19-2006 08:58 AM
Vacation in Iraq! Retire Early! tozz Young Dreamers 22 07-07-2005 09:20 AM

 

 
All times are GMT -6. The time now is 12:17 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.