Hey guys, I have roughly 200k between my 401k and Roth IRA. I’m currently putting $1625 a month into both of these. My employer matches 4% and I max my Roth yearly.
I also contribute $500 extra to the principal of my mortgage, and will have it paid off by 40. I will then invest my current $2500 mortgage payment into the market as I won’t have a payment. I also add $500 a month to my emergency fund.
I am 30, I was wondering if my plan was to be semi retired or fully retired before my 60’s – should I open a brokerage and distribute funds to that so I can have more cash on hand when I do plan to retire?
Retiring early and how to have funds on hand
byu/AugustBurnsBill inpersonalfinance
Posted by AugustBurnsBill
4 Comments
Ultimately your retirement accounts are not as locked up as most people think. [if you retire early, there are a few ways to access that money, it just takes some planning effort.](https://www.madfientist.com/how-to-access-retirement-funds-early/) This means that you should be prioritizing your tax advantaged accounts, [especially if you are wanting to retire early.](https://www.whitecoatinvestor.com/early-retirees-max-out-retirement-accounts/)
Depending on the interest rate of your mortgage, it may be worth changing your plans around that.
There are multiple ways to get money out before 59.5. Including Roth conversion ladders, Rule of 55, and SEPP 72(t) payments. Conversion ladders depend on a five year strategy and work well when you are retiring on quite a lot less than you lived on. Rule of 55 depends on using your 401k – not your IRA. SEPP works with IRA but has very steep penalties if you mess up. Mentioning all of these because growing your retirement funds in tax advantaged space is more optimal than taxable brokerage which is tax inefficient.
Forget paying off the mortgage (and locking up your money). Invest that $500/mo into a brokerage account now. Gives you so many more options.
What is your mortgage interest rate?
As someone once said “I had all these great plans and then life happened”