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Make sure you take into account taxes. Retirement investment plans such as 401ks and IRAs have significant tax benefits. The catch is that they can't be withdr
by enraged_camel 10y ago
Make sure you take into account taxes.
Retirement investment plans such as 401ks and IRAs have significant tax benefits. The catch is that they can't be withdrawn from before age 59 without huge penalties.
So if the goal is to retire early, one needs to use regular investment vehicles, which are subject to capital gains (15%),
- ahelwer 10y agoYou can transfer the money from 401k to IRA to Roth IRA then withdraw it after five years. You have to pay income tax during the IRA to Roth IRA conversion, but if you're retiring early your tax bracket is likely very low. Similarly, you'll be in the 0% bracket for long term capital gains.
- kudokatz 10y agofor those that are more curious about this, a google-able term is "Roth IRA Conversion Ladder". An alternative is "substantially equal distributions" if I recall properly.