How to Retire By 55 (or Sooner) on a Salary of $50,000 or Less

How to Retire by Age 55

If you’ve got dreams of retiring early by age 55 or sooner, then you’ll be very delighted to know that this goal is well within your reach! Believe it or not, our ability to reach financial independence is something that is always possible to achieve. Though the path to get there may not always be clear, there are always certain actions we can take that will cut through the brush and reveal a clearing at the end of the forest. The biggest question and sometimes most challenging obstacle: How? You might think that the dream of financial freedom is something that is only reserved for … [Read more...]

How Much Do I Need to Save for Retirement?  Probably Much, Much Less Than You Think!

how much do i need to save for retirement

When it comes to your retirement savings, how do you know when enough is enough? According to an article from CNBC, a global investment management firm surveyed investors and you know what they came up with? An average retirement nest egg of $2.5 million! That’s how much they believe it will take to have the same quality of life they’re enjoying today. As I found out first hand at a lunch outing with a friend, this sort of belief is all too common! But what if it’s not at all true?  What if you really sat down and actually figured out how much do I need to save for retirement and … [Read more...]

How a Backdoor Roth IRA Conversion Could Help Your Early Retirement Strategy

convert money

In the past I’ve talked before about how a 72t is a key part of my early retirement strategy. In case you’re not aware of what that is, a 72t is a special exception in the IRS rules that allows you to take money out from your 401k or IRA before age 59-1/2 and without facing that stiff 10% penalty (we’ve got a whole post about it here).  For anyone looking to retire early, that’s a massive win! While that’s all fine and good, one of the things I like to make sure of when it comes to my money strategy is to always be searching for something better. Maybe an option with less rules or … [Read more...]

How a Good Asset Allocation Model Can Impact Your Financial Future

Asset Allocation Model

Assets allocation is just not one of those topics that most people find particularly sexy.  Usually it’s the sort of thing that gets about as much attention as the instruction manual to your Blu-ray player. But as you’ll see below, it’s one of those parts of investing that you simply can’t ignore – largely because it can have a MAJOR effect on your finances and how long they ultimately last. The reason I wanted to bring this up is because of the roller-coaster of market activity lately.  In case you haven’t checked your stocks or 401k balance in a while, there have been some pretty big … [Read more...]

Ask MMD: Should I Do a Rollover, Pension Lump Sum or Annuity?

Pension Lump Sum or Annuity

How do you know you’re a true financial geek?  The answer: You get excited when one of your friends asks you a money question because it means crunching some numbers with Excel! Okay … maybe not to that extreme, but that’s pretty much how I felt recently for a friend who had a question about whether or not to cash out his pension with an old employer.  Here was his email: So I attended a webinar today about the buyout (with my old employer).  Attached is a snip of the five options they gave us and what the amounts would be. Rollover to an IRA or another employer’s plan = … [Read more...]

We Saved Over $1,000 in Taxes This Year By Contributing to Our Vanguard SEP IRA

Vanguard SEP IRA

One of the coolest things I discovered last year in terms of retirement planning was that I have the option to contribute to yet another tax-deferred savings plan – the SEP IRA. What’s even better is that not only was this contribution above and beyond everything I was already saving with my 401k and Roth IRA, but it also accomplished one VERY important task – saving me a boat load of money in the amount of taxes we owed for year on our Federal return. This year the story is even better!  With all the money my online business made, I’m going to end up contributing close to $4,000 this … [Read more...]

Our Ultimate Plan to Retire at 45 – December 2014 Update

money plan

If you have any aspirations to retire early some day, then this is the post you’ve been waiting for.  It’s my annual update to our plan for financial freedom. Trust me – you’re not going to find another plan like this anywhere else. For some time now I’ve been saying that my wife and I plan to retire when I turn 45 years old.  How do we plan to pull off such an ambitious goal?  That’s what this plan is all about.  We put numbers to paper and actually see what our cash flow will look like all throughout the future.  Hence the name of the blog, this is our “money design”. If you have … [Read more...]

Should I Go for a Pension Purchase Option or Invest the Money? – A Reader Question

Pension Purchase Option

A few weeks ago I receive a really great question from a friend of mine (we’ll call him LJ) regarding whether or not he should take a pension purchase option that his employer is offering him.  Here’s the email he sent me: I'm thinking about buying 5 years of generic pension service time. Seems like a no brainer, right? Not quite. I've had the actuarial done and it will cost me $37,800. A good chunk. I have the money in a 457 account and can roll it over to my pension administrator. I plan to retire in 22 years at 60 when I am eligible to draw the pension. I have 13.5 years of service … [Read more...]