Why use an IRA?

[usafLT]

Hello

I'm just getting started in planning for an early retirement. I have about 15K right now and trying to find the best way to get it invested. I see a lot of people talking about using an IRA but my goal is to build a large lump sum and then live off the interest. If I use an IRA I can't touch the money until 59 1/2, while I'd like to retire around 45. I'm aware of the 72T rule but again I really don't want to touch the lump sum once I retire.

Am I missing something about the IRA or am I right to stay away from it for what my plan is? Any insight will help. Thanks in advance!

 

[FinanceDude]

Instead of an IRA, you could build up a tax efficient non-qualified account. Do you have a 401K or something at work?

You could still do a Roth IRA if you qualify based on AGI. Something to check into.......

 

[walkinwood]

Hello
Am I missing something about the IRA or am I right to stay away from it for what my plan is? Any insight will help. Thanks in advance!

You still need to fund the years after you turn 59 1/2, so an IRA does have a place in your plans. You should fund both tax deferred and taxable accounts. Build a spreadsheet and play around with different funding scenarios - funding IRA first & letting it grow while funding taxable accounts, the other way around and also funding both accounts simultaneously. My guess is that you will find it most beneficial to fund an IRA first and then let it grow tax-free, while building funds to support your ER from 45 to 59 1/2.