Here's an email I recently received from a reader:
In an attempt to combine Dave's (Ramsey) 15% savings solution with an early retirement I'm stuck with a dilemma.
If I put 15% into retirement accounts, then I will not be able to touch until I am 59.5 without penalty. And that is presuming the government doesn't change the rules in the next 28 years. Likewise, if I don't put anything into retirement accounts and do only investment accounts, I'll have a potentially inconvenient tax burden. So the question is, how should I divide up my investments between traditional retirement accounts and early retirement accounts?
My employer matches 75 cents on the dollar for the first 8%, so into the 401K it goes. Take the free money. The next 2.5% would go to Roth IRAs. The remaining 4.5% goes into my traditional investment account. Is that prudent?
What's your advice for him?