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May 25, 2012


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I am working on saving money outside my 401k and roth ira's. I would like a chunk outside tax deferred accounts along with inside tax defered accounts so I can have some flexibility all around. I have between 10 to 15 years to do this. Hopefully so I don't HAVE to take out of a tax defered but only take out what I NEED or want. We will see what happens.

Right now I would like to retire at 60 but that is years away.

I do a similar type thing with hangers, but for a different reason. I typically wear a work shirt two or three times before washing it, unless there's an obvious stain or smell. After I iron it, I hang it on a wire hanger which means it's freshly washed and ironed. After I wear it once I put it on a plastic hanger. That way I can always tell whether it's been worn at least once. I'll have to maybe incorporate the backward trick, but I like to organize things by color or such regularly, so I think that would just get on my nerves :)

We have a soon to be licensed (teenage) driver. I have been thinking the same thing about new vs. used vehicles. The used prices we have seen are crazy. It may be time to employ your car buying method.

All of these comments are great but the one that I took away the most from is the 401K advice, its really eye opening the way people do not consider or research the tax implications of withdrawing funds from a retirement account. This is why I am slowly building a dividend stock portfolio.

I have rental properties and stock investment outside of my retirement accounts. These are throwing off passive income and will keep increasing. I'm leaving my day job before 40 and will probably need to do some part time work to cover the expense. I'm not planning to withdraw from the retirement account until I'm 65.
So my solution is rental properties, dividend stocks in after tax account, P2P lending, part time work, and spouse still working....

My wife and I bought a car just just over a year ago. We'd decided on a Honda Fit. Used Fits were only $4000 or so cheaper for cars with reasonable mileage. Because of this we decided to buy new. The reliability and included warranty were worth the extra money.

Here's what I would consider for getting money out of 401ks. Rollover to a regular IRA. Retire. After you've retired and your income tax rate has dropped substantially, roll a year's worth of expenses into a roth (paying income tax as you do it). Wait five years and you can withdraw that contribution penalty free. Complete a roll over every year and your good. Now you have to have savings to live on the first five years--that could be a Roth you've already built up or a non-tax-advantaged account.

Also, aren't you thinking of working part time? My guess is that, given that you only live on a small portion of your current income, you'd manage to get pretty far with a part time income and would only need a small supplement.

soners --

Yes, I think I can probably earn enough part-time to cover all my living expenses. But I'm looking at the worst-case scenario, assuming I couldn't work.

We also have the option of my wife returning to work at some point.

The 'substantially equal periodic payments' 72t rule is one of the little known details about retirement accounts. A lot of people who'd like to retire early don't know you can do that and may be shuffling around their retirement unnecessarily and losing out on the tax benefits in the process.

>Anyone else grappling with [available funds for early retirement]
I’m trying to plan for an early semi-retirement in the 55-60 range. I would like to work part time to earn just enough to cover expenses and let our retirement portfolio grow untouched. Our expenses should be much lower once our home is paid off and the kids are on their own.
I will have a LOT of Roth IRA contributions, and Roth 401K contributions that I could draw from without penalties. Ideally it wouldn’t be a problem even if I stopped working entirely as I have been putting a couple hundred/month into a regular investment account. In about 20 years that could be enough to fund a few years of expenses, especially if I bump up the savings rate once the mortgage is paid off.
-Rick Francis

Right now I'm using a Roth IRA which should help. Also down the road I will start contributing to taxable accounts but right now it is just the Roth IRA and Roth 401k for me.

I too think that the rules of car buying are changing a bit, or at least bending a bit to fit the current economy and market for used cars. If the premium to buy new shrinks to marginal amounts, it just might be more than worth it for the peace of mind of getting a new car.

I say that being someone who bought his last car used, with less than 30k miles on it. That was a good deal then, but now I'm not so sure it would be as good of an opportunity.

I have heard that the economy has created the demand for used cars. We prefer to buy new and just drive our car into the ground. Our car is currently eight years old and has 107,000 miles on it, but we are hoping to get a few more years out of it.

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