Retirement

Is it possible to withdraw money out of your 401(k) retirement plan before age 59-1/2? The short answer is "yes" - of course! But the 401(k) withdrawal rules are not without their obstacles. Remember that the IRS intends these plans to be a way for U.S. employees to save their money for one day when they are ready to retire. And in exchange, savers get a break on paying the taxes on these earnings now by deferring them to the future when the money is used. Therefore, because of this design, the rules that come along with making a 401(k) withdrawals can get a little tricky.  This is especially true if you need the money in an emergency or if you intend to retire early. In this post, we're going to explore your options for getting early … [Read more...] about What Are the 401(k) Withdrawal Rules for Early, Penalty-Free Access?

Have you ever wondered what kind of impact Social Security makes on the retirement safe withdrawal rate you choose? When it comes to retirement planning, lots of people know that there exists some withdrawal rate that is considered "safe". The most popular of these rates is of course the 4 Percent Rule. This was popularized in the 1990's by Bill Bengen and The Trinity Study. However, one very important point to consider is the fact these studies did NOT account for Social Security. They merely only considered retirement savings. Since most U.S. tax-payers will stand to receive at least some sort of Social Security benefit, logically this is good, right? It means you should be able to start with a higher than usual safe … [Read more...] about How Does Social Security Factor Into Your Retirement Safe Withdrawal Rate?

Would you like to contribute to a Roth IRA, but been told you make too much money to do so? According to the IRS, your Roth IRA contribution limits can be affected by how much you earn as well as your tax filing status.  In other words, the more money you and your spouse earn, the greater the chances your ability to put money into a Roth will be reduced … all the way down to zero. However, I’m here to tell you: You CAN still contribute to one; even if you earn more than the IRS Roth IRA income limits.  You just have to use a little known technique of what’s known as a Backdoor Roth IRA conversion.  More on that below. First, let’s go over the conventional rules for how much you can contribute to a Roth IRA.   Roth IRA … [Read more...] about Roth IRA Contribution Limits and Using the Backdoor Conversion to Get Around Them

Do you wish you could be saving more money for retirement than you are right now? It’s easy to read a couple of personal finance blogs and feel like you’re being left behind if you’re not budgeting yourself down to the bare-bones or saving up an obscene amount of money. But don’t get discouraged!  It might benefit you to know that even small changes to your saving habits can still help aide in your retirement planning success. How small of a sacrifice are we talking? My challenge to you: Start by spending $50 less per paycheck and redirecting that savings back into your tax-deferred retirement account.  Yes … even an amount that minimal can still make quite a bit of difference between now and the day you plan to retire. How … [Read more...] about How to Turn $50 Dollars Per Paycheck Into $163,732

If you’re hoping to retire sooner rather than later, then there’s more to be gained from saving more and spending less than you might realize at first. On the surface, everyone can recognize that saving a larger proportion of your income does exactly what you think it will do: Help you stock-pile more money more rapidly, and reach your nest egg target quicker. But another benefit that sometimes gets lost is the way in which our habits react. Spending less doesn’t JUST mean having more money to set aside. It requires learning how to forego that lost additional income, and adjusting your standard of living. This, in turn, and completely affect what our target nest egg is ultimately.  Hence, spending less and saving more could really be … [Read more...] about The Power of Saving More and Spending Less – The Double-Ended Approach to Retire Early

If you've ever wondered what it's like to talk to me in person about retirement planning, then I've got something very special for you! You can check me out in my first-ever podcast interview with Joel Parker from the Financial Freedom Community at this link here. Or if you normally listen to podcasts on your smartphone or tablet, then click the app, search Financial Freedom Community, and go to "MoneySmarts 011: Preparing For Retirement with DJ Whiteside (MyMoneyDesign.com)". What kind of topics do we cover? How I got into this whole personal finance-thing in the first place. Where my wife and I are at on our personal path to financial independence, and why I'm not trying to push the date up sooner anymore. How using … [Read more...] about Check Out My Retirement Planning Interview with the Financial Freedom Community Podcast

MMD: The following post is a guest contribution from Deacon Hayes @WellKeptWallet.com.  It's about a topic that I think about often: How will I constructively make the most of my time once I achieve financial independence?   There are a lot of things about retiring early that people find enticing! The option of having to work ten, twenty or thirty years less than most people work brings with it many attractive benefits. First, there is the freedom. Having enough income from investments to do what you want, when you want means you are no longer forced to live under the schedule of the company you work for. If you want to travel, you can. If you want to live without an alarm clock, go for it. When you retire early your time … [Read more...] about The Dangers of Early Retirement