newAndImproving
Confused about dryer sheets
I listened to a podcast recently and got the impression that there was a way that 401k/Roth funds were available before 59 1/2. Is that correct?
I am close to maxing out my retirement contributions each year, but haven't because the availability of the money for use at any age is appealing. It seems that putting funds in a place where you cannot access it does not make sense for someone who hopes to retire early.
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Maybe I can do a (very rough) example of what I have tried to explain:
Salary: $100k/year
Expenses: $30k/year
Assumption: 25% effective tax rate
Flaw: does not account for impact of access to Roth account occurring at age 55.
Option A: $19k/year to Roth account
Outcome: $26k/year is saved outside of retirement accounts. This money is accessible at any time. $19k/year in the Roth account grows tax free but is inaccessible until 55.
Option B: No retirement contributions
Outcome: $45k/year is saved outside of retirement accounts.
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Is the best answer maxing your retirement accounts and then you "just" have to save enough to make it from your age at retirement to when you can start drawing on those funds?
I am close to maxing out my retirement contributions each year, but haven't because the availability of the money for use at any age is appealing. It seems that putting funds in a place where you cannot access it does not make sense for someone who hopes to retire early.
----------
Maybe I can do a (very rough) example of what I have tried to explain:
Salary: $100k/year
Expenses: $30k/year
Assumption: 25% effective tax rate
Flaw: does not account for impact of access to Roth account occurring at age 55.
Option A: $19k/year to Roth account
Outcome: $26k/year is saved outside of retirement accounts. This money is accessible at any time. $19k/year in the Roth account grows tax free but is inaccessible until 55.
Option B: No retirement contributions
Outcome: $45k/year is saved outside of retirement accounts.
----------
Is the best answer maxing your retirement accounts and then you "just" have to save enough to make it from your age at retirement to when you can start drawing on those funds?