Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
19 and addicted!
Old 03-27-2014, 05:40 PM   #1
Confused about dryer sheets
 
Join Date: Mar 2014
Posts: 6
19 and addicted!

Hey guys, after seeing this forum, I couldn't help but join.
I am on my way to a early retirement. While still being a student, I have managed to juggle school and work, which has allowed be to put 9,000 away in a vangaurd roth IRA and I have about 16,000 in taxable accounts. I also have emergency money saved as well. I will max out my IRA as long as I can, and hopefully after graduating get a job that offers a roth 401k. I will also still put extra money aside in taxable accounts as well. What advice do any of you guys have for me? I am also addicted to saving and investing, I find it fun to watch the markets/news daily. Feels good to be a member!
__________________

__________________
rweb941 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!

Old 03-27-2014, 06:14 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,616
It will probably be better for you to not use a Roth 401(k), but to use a traditional 401(k). The reason is that early retirees can withdraw from the traditional 401(k) practically tax-free. So the money will be tax-free going in and tax-free coming out. That's better than a Roth 401(k) where it will be taxed before going in and tax-free coming out.
__________________

__________________
LOL! is offline   Reply With Quote
Old 03-27-2014, 06:33 PM   #3
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,486
Quote:
Originally Posted by rweb941 View Post
... I find it fun to watch the markets/news daily...
My first bit of advice would be to stop doing this. You're going to be far better off if you don't let daily market gyrations, predictions, forecasts, and other noise dictate - or even impact in the most minute way - your actions.

Welcome aboard. Congrats on a great start!
__________________
nash031 is offline   Reply With Quote
Old 03-27-2014, 07:55 PM   #4
Confused about dryer sheets
 
Join Date: Mar 2014
Posts: 6
I love watching the gyrations though!!! I don't base any of my financial decisions of off the daily fluctuations.
__________________
rweb941 is offline   Reply With Quote
Old 03-27-2014, 07:56 PM   #5
Confused about dryer sheets
 
Join Date: Mar 2014
Posts: 6
I also dont plan on using my 401k a bajillion years down the road until I'm 60. Live off of taxable assets first.
__________________
rweb941 is offline   Reply With Quote
19 and addicted!
Old 03-27-2014, 08:14 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
19 and addicted!

LBYM, invest as much as possible, stay debt free, marry well; but you're only 19, for Pete's sake, so have some fun as well.
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 03-27-2014, 08:18 PM   #7
Recycles dryer sheets
chris66's Avatar
 
Join Date: Jan 2014
Posts: 78
What are you studying in school? Are you sure it's something you want to retire from quickly? If so, are you sure this is what really what you want to study?

You're doing extremely well for your age, and I wish I was in that kind of shape at 19. Still, in addition to investing, you may want to figure out what makes you happy. You're just starting out...enjoy the whole journey

But I'll emphasize again -- you're doing great for your age. Very smart!
__________________
chris66 is offline   Reply With Quote
Old 03-27-2014, 08:35 PM   #8
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 390
Congrats. You're definitely an outlier for your age.

Quote:
It will probably be better for you to not use a Roth 401(k), but to use a traditional 401(k). The reason is that early retirees can withdraw from the traditional 401(k) practically tax-free. So the money will be tax-free going in and tax-free coming out.
LOL, can you explain this to me. I don't understand.
__________________
Elbata is offline   Reply With Quote
Old 03-27-2014, 09:36 PM   #9
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 103
Quote:
Originally Posted by rweb941 View Post
I love watching the gyrations though!!! I don't base any of my financial decisions of off the daily fluctuations.
If I ever opened a trampoline store, I don't think I'd call it Trampo-Land, because you might think it was a store for tramps, which is not the impression we are trying to convey with our store. On the other hand, we would not prohibit tramps from browsing, or testing the trampolines, unless a tramp's gyrations seemed to be getting out of control.
__________________
zesty is offline   Reply With Quote
Old 03-27-2014, 09:40 PM   #10
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 103
Quote:
Originally Posted by mikefixac View Post
LOL, can you explain this to me. I don't understand.
The first $9000 taken out would be taxed at 10%, and the next $27000 would be taxed at 15%. It's not tax-free, but it's less than I pay in taxes now, and I probably (hopefully) won't need much past an inflation adjusted $36k per year to live in retirement.
__________________
zesty is offline   Reply With Quote
Old 03-28-2014, 08:36 AM   #11
Dryer sheet wannabe
 
Join Date: Sep 2012
Location: Clayton
Posts: 13
Are you guys forgetting the 10% penalty? For early retirement Roth would always be better because at least you can get principle tax and penalty free. If you are taking trad 401k/IRA assets before 59 1/2 you would be paying taxes and the penalty. You could do a 72T but that would be harder to control in a long early retirement. I prefer using my principle from roth and taxable money to avoid penalties and have lower taxes. If you do have a large amount of Trad money you can get a Roth conversion ladder going over a 5 year span. I find that is a great way to get to the Trad money early without penalty.
__________________
borrom2002 is offline   Reply With Quote
Old 03-28-2014, 08:49 AM   #12
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,486
Quote:
Originally Posted by rweb941 View Post
I love watching the gyrations though!!! I don't base any of my financial decisions of off the daily fluctuations.
Not yet, anyway. See how you do when there's a 20 or 30% drop in the market! Just beware of watching and caring!

Good luck!
__________________
nash031 is offline   Reply With Quote
Old 03-28-2014, 10:29 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,410
WADR, you are way too young to be preoccupied with retirement. At the same time, you are doing well in saving - congratulations!!

Focus now on training and entering a profession that you enjoy and can make money to support yourself. Don;t forget to enjoy life - you're young - go out and have some fun!

As you career evolves, save regularly, LBYM, invest in no-load, low cost index equity funds and before you know it you'll have gray hair (or no hair depending on your genes) and be ready to retire.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 03-28-2014, 10:38 AM   #14
Recycles dryer sheets
 
Join Date: Feb 2014
Location: SF Bay Area
Posts: 252
Quote:
Originally Posted by rweb941 View Post
I also dont plan on using my 401k a bajillion years down the road until I'm 60. Live off of taxable assets first.
What is it about that statement that is so much fun to read? Hey folks (not you OP), was it a 'bajillion' years ago we were his age, or just yesterday!

But seriously, you are thinking, planning, and acting ahead, and that's very good. Keep it up
__________________
"The only function of economic forecasting is to make astrology look respectable"
- J.K. Galbraith
FireBug is offline   Reply With Quote
Old 03-28-2014, 11:32 AM   #15
Full time employment: Posting here.
Birdie Num Nums's Avatar
 
Join Date: Mar 2010
Location: Seattle-ish
Posts: 776
Quote:
Originally Posted by LOL! View Post
It will probably be better for you to not use a Roth 401(k), but to use a traditional 401(k). The reason is that early retirees can withdraw from the traditional 401(k) practically tax-free. So the money will be tax-free going in and tax-free coming out. That's better than a Roth 401(k) where it will be taxed before going in and tax-free coming out.
Huh? Really?
Uncle Sam gives you some tax advantages with both a traditional and Roth 401(k). Contributions to a traditional 401(k) lower your taxable income, earnings grow tax-free, and you don't owe income taxes until you make a withdrawal. With a Roth 401(k), you donít get the up-front deduction, but any earnings grow tax-free and withdrawals after age 59Ĺ are tax-free provided youíve held the account for five years.
__________________
Birdie Num Nums is offline   Reply With Quote
Old 03-28-2014, 11:44 AM   #16
Recycles dryer sheets
 
Join Date: Feb 2014
Location: SF Bay Area
Posts: 252
I believe LOL! meant to say that the 10% penalty could be avoided. But, perhaps they could clarify.
__________________
"The only function of economic forecasting is to make astrology look respectable"
- J.K. Galbraith
FireBug is offline   Reply With Quote
Old 03-31-2014, 12:55 PM   #17
Recycles dryer sheets
iam21177's Avatar
 
Join Date: May 2011
Posts: 159
Way to go! My only advice would be to make sure saving/investing doesn't impair your meaningful relationship or rob you of great experiences (this is for if you're truly addicted, like life-sacrificing-addicted). Your money will grow, grow, grow!
__________________
iam21177 is offline   Reply With Quote
Old 03-31-2014, 01:28 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by LOL! View Post
It will probably be better for you to not use a Roth 401(k), but to use a traditional 401(k). The reason is that early retirees can withdraw from the traditional 401(k) practically tax-free. So the money will be tax-free going in and tax-free coming out. That's better than a Roth 401(k) where it will be taxed before going in and tax-free coming out.
Please elaborate.........I always am willing to learn something new...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 03-31-2014, 06:07 PM   #19
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 1,579
I think the Roth is great for you now. With relatively low income, your tax savings in a pre-tax account now is not much benefit. Once you get out of school and have higher income, the pre-tax 401k/403b makes good sense, especially to pick up the employer match!

Congratulations on your success so far. Keep it up and you will be able to retire early for sure.
__________________
After Monday & Tuesday even the calendar says, W-T-F...

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/16 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 03-31-2014, 06:25 PM   #20
Full time employment: Posting here.
CaliforniaMan's Avatar
 
Join Date: Dec 2013
Location: San Diego
Posts: 846
Quote:
Originally Posted by nash031 View Post
Not yet, anyway. See how you do when there's a 20 or 30% drop in the market! Just beware of watching and caring!

Good luck!
+1
IMHO the absolute worst time to begin you association with the market is during a booming bull market. You get used to the gyrations and begin to think it is fun, and start planning how easy it will be to retire keeping it up like this. The important thing will be to see how addicted you are after you are way way down, and all the news reports and your friends are warning of the coming economic collapse.

Quote:
Originally Posted by pb4uski View Post
WADR, you are way too young to be preoccupied with retirement. At the same time, you are doing well in saving - congratulations!!

Focus now on training and entering a profession that you enjoy and can make money to support yourself. Don;t forget to enjoy life - you're young - go out and have some fun!

As you career evolves, save regularly, LBYM, invest in no-load, low cost index equity funds and before you know it you'll have gray hair (or no hair depending on your genes) and be ready to retire.
+1
You are doing an exemplary job at savings now, but I agree with pb4uski, you have a lot of exciting experiences ahead of you in life. You will spend a lot of time working, find a profession you enjoy. And living life is addicting too, not only saving for later.
__________________

__________________
Merrily, merrily, merrily, merrily,
Life is but a dream.
CaliforniaMan is offline   Reply With Quote
Reply


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
Jill and I am addicted to leisure slaternuthink Hi, I am... 11 04-04-2013 08:54 AM
Man addicted to wife? Cattusbabe Other topics 20 02-28-2010 12:05 PM
Addicted to Saving Money Geoffrey FIRE and Money 33 11-09-2008 10:20 AM
Addicted to making money shiny FIRE and Money 25 03-23-2006 01:51 PM
Becoming Addicted to no Appts............. Cut-Throat Life after FIRE 12 06-15-2004 08:09 AM

 

 
All times are GMT -6. The time now is 10:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.