People who are able to retire at early are lucky. I have few months left to become 60 and need to look at calling it quits my only fear is running out of funds so I am keen on investing what could be the safest possible ways to invest in order to live a comfortable life
Correct! They’ve done a video on this since you’ve commented. But the 457 allows for penalty free withdrawals upon “separation” OR retirement (at any age!). Still have to pay taxes, of course.
After tax account is a brokerage account which you can open one up through fidelity/E*Trade/vanguard etc. You can then buy indexes or mutual funds that have amazing returns over the course of no less then 10yrs. FXAIX is fidelity’s SP500 one. Cheers!
Don't discount the power of having paid off home and cars. Plus if you can get just a few rentals going it would make a pretty good retirement to have some mailbox money and fewer bills.
If you’re young with the goal of early retirement, dollars put towards a 4% mortgage are not very effective in getting you towards that early retirement goal when compared with dollars invested at the market average of 10%
@@tonycrabtree3416 - basic investment math says otherwise. Sure, it might be better for someone psychologically (in that they feel better about themselves). But mathematically? The main scenario in which it's better to pay off low-interest debt rather than put it into something that gives high(er) returns is when you have already achieved your financial goals, and are striving to keep your income, rather than grow it. This is covered by Step 3 of the FOO - pay off high interest debt, as defined as "6% or higher, -1% for every decade over 20." So if your mortgage is over 3% an you're in your 50's? Then yes, it's probably a good idea to pay it off, as it's been shown that having any form of debt in retirement is worse than having the eqivalent amount of stock. Stock value fluctuates, but debt is a constant weight. If you're using the former to pay off the latter, you HAVE to sell it every month, even if the stock price is down. This increases the liklihood that you will run out of resources in a down market. In contrast, if you pre-paid the mortgage, you could time the market and sell when the stock was high, (probably when you are still working.) Now, that rule does assume you're retiring in your 60's. If you are retiring in your 40's or 50's? Then yes, you should probably pre-pay. But that's just shifting the recommendation back a decade, as the rule itself assumes a mid-60's retirement target date. For anything else? No. Basic compound interest says you'll make more money in the long run by investing in the market. Personally? I'll be pre-paying my mortgage once I hit 50 - it's at 3.75%, and I'll have 50k or so left at that point. (I looked into getting it refinanced in 2021, but the cost of refinancing made it not worth it, even at that rate.) In contrast, I won't even THINK about refinancing my other mortgage (at 2.75%) until I'm in my mid-50's, as that'll be a lot closer to retirement. Now - am I investing in conservative stocks in the meantime, in order to build up a nest egg so that I CAN pay it off if I want to? Yes. But as someone who is still working, it's much more efficient for me to take advantage of my non-reliance on my portfolio to let it grow, rather than engage in more conservative strategies of maintaining wealth.
@@tonycrabtree3416 You may be paying more in interest than you would in rent. There are plenty of good reasons to be a homeowner. Homeownership is not an investment. If you want Financial Independence and early retirement then whether or not homeownership gets you there depends on where you live and the housing market.
Rollovers from a traditional retirement plan such as a 401(k) or traditional IRA to a Roth IRA are known as conversions, and the amount rolled over is taxable. There is no limit on the amount you can roll over or convert into a Roth IRA. My Roth account pays me dividends and by rolling over my 401(k) into my Roth account. I can super charge the amount that’s being paid out and it would be tax free.
Dude you are doing so good investing early. Keep going and don’t give up! Double down on investing when the market is down and I’d say get some VTI stock to capture the whole market!
True, but aren’t these calculations kind of confusing and impossible to pre-determine? Also, I think they avoid mentioning them bc once you start withdrawals, you’re losing out on compounded growth.🤷♂️
Maxing out my Roth IRA and my 403b. Also have a defined benefit pension that im required to contribute to. Combined, that's about 25% of my gross. I still have my wife's 403b and 457 available to contribute to. At what point do I need to not max out my retirement accounts and start to invest in a traditional after tax investment account?
457s are GREAT for early retirement because she may be able to start taking money from it as soon as she leaves her job. If you know she wants to retire early and you know you're not going to need the money before retirement, that may be the way to go
aren’t these calculations kind of confusing and impossible to pre-determine? Also, I think they avoid mentioning them bc once you start withdrawals, you’re losing out on compounded growth.🤷♂️
seems like they place FAR too much importance on avoiding the 10% penalty. if you are retiring and living on less than 100k annually. that 10% is irrelevant due to standard deduction
Not if you're only withdrawing the principal - that is, the money you put in originally. (ie, the money you've already paid taxes on.) You can pull that out any time without penalty....if the account has been open for at least five years (I think - it's either "the money has to have been in there for five years," or "the account has to have been active for five years." I can't recall which.)
You are allowed to access the money in the 401(k) of your last employer penalty free at 55 if you retire early. It is still taxed but there is no 10% penalty.
I have a Roth IRA and a Life Insurance Retirement Plan to grow my dollars tax-free. My LIRP was be used for any money I need before 59.5 if I decide to retire before then.
I'm left struck with thousands of dollars disappearing from my 401k due to soaring inflation. Where can I safeguard and grow $500k cash for the next 2 years with minimal risk? my goal is to retire early and afford my lifestyle after retirement.
Once you quit, your 401k transfers to an IRA. At that point, your ROTH IRA Contributions (after in IRA for 5 years) can be used at anytime tax and penalty free. But only ROTH IRA Contributions.
@@tonycrabtree3416 - you can pull out your contributions at any time after 5 years - that is, the money you put into the account, as long as the Roth account itself has been open for at least 5 years. (I think.) So if you put 50k in your account, and over 5 years it's grown to 80k, you could pull out the original 50k. The idea is that you've already paid taxes on it, so there shouldn't be a penalty for you trying to get at it.
That's my understanding too as long as you no longer work for the employer and they allow you to keep the money in the 401K during retirement. If you move the money out of that employer's 401k, then you have to wait to 59 and a half.
@@IrwinsToyBox 95% of population probably shouldn't do Roth conversions 50% of population have under $100,000 in retirement savings 80% have less than $500,000
@@johngill2853 and that blows my mind! Everybody gotta have that new truck, house, boat, trailer, etc, etc. They never look past their nose. My motto is “Beer taste on a Champagne Budget!”
Boh you act like everyone needs a two story house and a horse. You can retire when you damn well please if you consume less. These assholes depress the hell out of me. Makes me feel like there's only one way to live and that's to work until you die. Which in my family is around 50ish
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People who are able to retire at early are lucky. I have few months left to become 60 and need to look at calling it quits my only fear is running out of funds so I am keen on investing what could be the safest possible ways to invest in order to live a comfortable life
Investments are an absolute game changer with the right information anybody can 100x their finances that is how the rich keep getting richer
Is it possible to get in contact with a person like that?
Ok. I just have to GOOGLE his name… CHRIS RYAN STEWART. Thanks
@@LeeParkchu CHRIS RYAN STEWART
GOOGLE the name
The bots are talking to themselves again
This is what im doing! Not set on early retirement though
agree. living on taxable bucket after retiring at 55 y/o.
If your work offers at 457b, that’s a good retirement account to bridge the gap when you are looking to leave the workforce.
Correct! They’ve done a video on this since you’ve commented. But the 457 allows for penalty free withdrawals upon “separation” OR retirement (at any age!). Still have to pay taxes, of course.
This advice is so bang on.
After tax account is a brokerage account which you can open one up through fidelity/E*Trade/vanguard etc. You can then buy indexes or mutual funds that have amazing returns over the course of no less then 10yrs. FXAIX is fidelity’s SP500 one. Cheers!
You read my mind of wondering what it was! Thank you
But he said Roth, so shouldn't it be, let's say, Vanguard's Roth IRA instead of traditional brokerage account ?.
Don't discount the power of having paid off home and cars. Plus if you can get just a few rentals going it would make a pretty good retirement to have some mailbox money and fewer bills.
If you’re young with the goal of early retirement, dollars put towards a 4% mortgage are not very effective in getting you towards that early retirement goal when compared with dollars invested at the market average of 10%
@@parkerphelps5202 A mortgage will always be the largest payment for most people, so the sooner that is gone the better.
@@tonycrabtree3416 - basic investment math says otherwise.
Sure, it might be better for someone psychologically (in that they feel better about themselves). But mathematically? The main scenario in which it's better to pay off low-interest debt rather than put it into something that gives high(er) returns is when you have already achieved your financial goals, and are striving to keep your income, rather than grow it.
This is covered by Step 3 of the FOO - pay off high interest debt, as defined as "6% or higher, -1% for every decade over 20."
So if your mortgage is over 3% an you're in your 50's? Then yes, it's probably a good idea to pay it off, as it's been shown that having any form of debt in retirement is worse than having the eqivalent amount of stock.
Stock value fluctuates, but debt is a constant weight. If you're using the former to pay off the latter, you HAVE to sell it every month, even if the stock price is down. This increases the liklihood that you will run out of resources in a down market.
In contrast, if you pre-paid the mortgage, you could time the market and sell when the stock was high, (probably when you are still working.)
Now, that rule does assume you're retiring in your 60's. If you are retiring in your 40's or 50's? Then yes, you should probably pre-pay. But that's just shifting the recommendation back a decade, as the rule itself assumes a mid-60's retirement target date.
For anything else? No. Basic compound interest says you'll make more money in the long run by investing in the market.
Personally? I'll be pre-paying my mortgage once I hit 50 - it's at 3.75%, and I'll have 50k or so left at that point. (I looked into getting it refinanced in 2021, but the cost of refinancing made it not worth it, even at that rate.)
In contrast, I won't even THINK about refinancing my other mortgage (at 2.75%) until I'm in my mid-50's, as that'll be a lot closer to retirement.
Now - am I investing in conservative stocks in the meantime, in order to build up a nest egg so that I CAN pay it off if I want to? Yes. But as someone who is still working, it's much more efficient for me to take advantage of my non-reliance on my portfolio to let it grow, rather than engage in more conservative strategies of maintaining wealth.
@@kevinschultz6091 Do your thing, boo!
@@tonycrabtree3416
You may be paying more in interest than you would in rent. There are plenty of good reasons to be a homeowner.
Homeownership is not an investment. If you want Financial Independence and early retirement then whether or not homeownership gets you there depends on where you live and the housing market.
You can do a 72t distribution from your IRA without waiting to 59.
Rollovers from a traditional retirement plan such as a 401(k) or traditional IRA to a Roth IRA are known as conversions, and the amount rolled over is taxable. There is no limit on the amount you can roll over or convert into a Roth IRA.
My Roth account pays me dividends and by rolling over my 401(k) into my Roth account. I can super charge the amount that’s being paid out and it would be tax free.
So basically, a Roth 401K is better than a traditional 401K ?
opened my roth ira when i was 19, 22 now
Max it out every year. You'll be golden at age 60. 🎉
Dude you are doing so good investing early. Keep going and don’t give up! Double down on investing when the market is down and I’d say get some VTI stock to capture the whole market!
Another option is 72t withdraws for those accounts
True, but aren’t these calculations kind of confusing and impossible to pre-determine? Also, I think they avoid mentioning them bc once you start withdrawals, you’re losing out on compounded growth.🤷♂️
457b, if you're lucky enough to have one!
There’s a way to get ROTH without 401K or Roth IRA?
Listen up kids
Maxing out my Roth IRA and my 403b. Also have a defined benefit pension that im required to contribute to. Combined, that's about 25% of my gross. I still have my wife's 403b and 457 available to contribute to. At what point do I need to not max out my retirement accounts and start to invest in a traditional after tax investment account?
457s are GREAT for early retirement because she may be able to start taking money from it as soon as she leaves her job. If you know she wants to retire early and you know you're not going to need the money before retirement, that may be the way to go
You can withdraw your Roth contribution dollars to live on before 59.5.
I used rule of 55. Retired at 57.
Every time I hear a YT video about early retirement before 59.5, why do I never hear them even mention 72(t)?
aren’t these calculations kind of confusing and impossible to pre-determine? Also, I think they avoid mentioning them bc once you start withdrawals, you’re losing out on compounded growth.🤷♂️
seems like they place FAR too much importance on avoiding the 10% penalty. if you are retiring and living on less than 100k annually. that 10% is irrelevant due to standard deduction
I want to retire from having to work full time as early as possible
Rule of 55??
You're right, he totally overlooked that important fact.
Wouldn't the best way to "bridge the gap" be to NOT put money into an account you can't touch?
They want people to work forever, that's why they never talk about taxable accounts
50 is way too late for me to retire. I’m aiming to retire at 35.
yeah but are there not withdrawal penalties before 59 with roth ira? thats what i see on most websites
10% is the early withdrawal penalty
Not if you're only withdrawing the principal - that is, the money you put in originally. (ie, the money you've already paid taxes on.) You can pull that out any time without penalty....if the account has been open for at least five years (I think - it's either "the money has to have been in there for five years," or "the account has to have been active for five years." I can't recall which.)
@@brandonbernard791 you can always withdraw your contributions without penalty, anytime.
@@kevinschultz6091 the acct has to have been opened for 5 years
I can link you to a legit brokerage for your retirement investment reply to my comments if you need the link
You are allowed to access the money in the 401(k) of your last employer penalty free at 55 if you retire early. It is still taxed but there is no 10% penalty.
Not if you leave at 45 or 50, heck even 53. The rule of 55 ONLY applies if you retire in the year that turn age 55.
I have a Roth IRA and a Life Insurance Retirement Plan to grow my dollars tax-free. My LIRP was be used for any money I need before 59.5 if I decide to retire before then.
Best advice is to invest in stock market I can link you to a legit brokerage for your investment
I'm left struck with thousands of dollars disappearing from my 401k due to soaring inflation. Where can I safeguard and grow $500k cash for the next 2 years with minimal risk? my goal is to retire early and afford my lifestyle after retirement.
Vanguard money market funds are currently paying about 5.27%. That beats inflation and is pretty dang safe.
Can link anybody that’s interested to know a legit brokerage for retirement invest-ment
Once you quit, your 401k transfers to an IRA. At that point, your ROTH IRA Contributions (after in IRA for 5 years) can be used at anytime tax and penalty free. But only ROTH IRA Contributions.
You're saying one can take distributions from a Roth IRA at 45?
@@tonycrabtree3416 - you can pull out your contributions at any time after 5 years - that is, the money you put into the account, as long as the Roth account itself has been open for at least 5 years. (I think.)
So if you put 50k in your account, and over 5 years it's grown to 80k, you could pull out the original 50k.
The idea is that you've already paid taxes on it, so there shouldn't be a penalty for you trying to get at it.
@@tonycrabtree3416 only if they are contributions.
I’m just going to convert as much as I can every year from my 401(k) into a Roth IRA account.
@@kevinschultz6091 any contributions or contributions from a conversion to a Roth IRA?
Ok and what are those bridge accounts to fund retirement before 591/2 ????????
Na all wrong you do it at 35 that’s a early retirement. You identify what’s required for your job to early retire and work on those prerequisites.
You can touch your 401k the year turn 55 when retired or quick or get fired!
"or quick?" grammar unclear
Quit
That's my understanding too as long as you no longer work for the employer and they allow you to keep the money in the 401K during retirement. If you move the money out of that employer's 401k, then you have to wait to 59 and a half.
Too bad for us who don’t live in the states that this advice doesn’t apply
I'm glad a 35 year old dropped this knowledge on the web. all is well now.
No
Cookie cutter advice here, I suggest everyone do there homework
95% of the population don’t do their homework and depend on stuff like this for education. That’s why he is popular.
@@IrwinsToyBox 95% of population probably shouldn't do Roth conversions
50% of population have under $100,000 in retirement savings
80% have less than $500,000
@@johngill2853 and that blows my mind! Everybody gotta have that new truck, house, boat, trailer, etc, etc. They never look past their nose. My motto is “Beer taste on a Champagne Budget!”
Boh you act like everyone needs a two story house and a horse. You can retire when you damn well please if you consume less. These assholes depress the hell out of me. Makes me feel like there's only one way to live and that's to work until you die. Which in my family is around 50ish
Too bad your clients won’t learn about Equal Payments withdrawals, instead. 72(t)(2)(A)(iv). 🤷♂️