Did you know that you can use a 72t distribution to get early access to your 401(k) or most any other retirement account before age 59-1/2 ... WITHOUT having to pay a penalty? One of the biggest obstacles we face when we're saving for retirement is the rule that we have to wait so long in order to finally use it. For years, I had a goal to retire early (long before age 60). But I was completely stumped by how I was actually going to be able to take money out of it. I remember being in my young 20's and thinking "what good is using a 401(k) if I have to wait almost 40 years to get my money back out"? Fortunately, not only did I wise up and realize that saving your money in a 401(k) is a hell of deal (when you look at how … [Read more...] about How to Use a 72t Distribution to Get Money Out of Your 401(k) and Retire Early!
If you’re looking to retire in your mid 50’s and want to be able access your retirement nest egg, then I’ve got some good news for you: The 401(k) Age 55 Rule might allow you to accomplish your goal of early retirement! As most people in the U.S. know, when it comes to retirement planning, the IRS says you have to wait until at least age 59-1/2 to start withdrawing funds from any tax-deferred retirement accounts such as your 401(k) or IRA. Otherwise, you’ll have to pay a pesky 10% penalty along with any applicable taxes. If you’re an early retirement seeker like, then this creates a big problem. How are you supposed to be able to access all the money you’ve saved for decades to be able to start your retirement and … [Read more...] about The 401(k) Age 55 Rule for Early Retirement Income
When it comes to retirement accounts, there's one debate that almost everyone must consider: A Roth IRA vs. Traditional IRA - Which one is better? What are the differences, and how do I know which one is the right one for me? As someone who has both a Roth and a Traditional account, let me tell you: Each one has traits that can be very valuable to you in their own way! In general, no matter which one you choose, you’re doing a great thing by taking advantage of a unique opportunity from the IRS to save and grow your money without having to pay taxes right away (or in some cases, never). Over time, when compared to a “regular” savings or investment account, these tax-advantages will add up in an incredible way. For some … [Read more...] about Roth IRA vs. Traditional IRA – Which One Is Better for You?
Have you ever wondered when to drop collision and comprehensive coverage from your auto insurance policy? Without a doubt, auto insurance is a must-have when your vehicle is relatively new, higher in value, and you need the financial protection. But what happens as time goes on and our vehicles begin to decrease in value? What about when you've racked up hundreds of thousands of miles, and you know the trade-in value of your car will be next to nothing? Is there a point where full coverage simply doesn't make good financial sense any longer? This is a question I struggle with every time I have to renew my auto insurance policy. I commute every day over 60 miles each way to and from work. Traditionally, to get the most bang for … [Read more...] about How Do You Know When to Drop Collision and Comprehensive Coverage?
Have you ever thought to yourself: What's the least amount or minimum retirement savings I could get away with? Don't be bashful about asking it. It's a perfectly valid question to consider; especially when you think how little retirement savings most people actually have. (In case you're wondering, its $107,000 for Americans between the ages of 55 and 64 according to data from the Government Accountability Office (GAO).) While the major media outlets would have you believe that you need somewhere between $2 and $3 million dollars, you might be pleasantly surprised to learn that you could possibly become financially independent and consider leaving full-time employment for a whole lot less. In fact, if there's one thing … [Read more...] about What is the Minimum Retirement Savings You Could Comfortably Live On?
As humans, we tend to value a lot of different qualities and abilities in ourselves. But when it comes to appreciating the value of knowledge, this is one asset we tend to underestimate. Consider this: Would you say you're an "expert" at something? Don't be too humble. According to the author Malcolm Gladwell, author of the incredible book "Outliers", it takes at least 10,000 hours to become a master at something. While that might sound like a crazy amount of time to invest into something, chances are that you may have already put that much time into your favorite hobby or interest. Perhaps you have knowledge or skills that are the by-product of your day job. And even if its not the most interesting topic, if someone were to … [Read more...] about Never Underestimate the Value of Knowledge
Are you wondering how to maximize your 401(k) contribution without feeling like you won't have any money leftover to spend? Hey, I get it! When I was just starting out as a young professional, I started off by contributing what I thought was a decent amount to my 401(k) retirement plan (10 percent or so) ... But as we started really defining how much money we'd eventually need to retire, especially as our goal timeline transitioned from our 60's down to our 40's, it quickly became apparent that our savings rate wasn't enough. If we were going to retire early successfully, then we were going to need to substantially bump up our 401(k) contributions. And by A LOT! So how do you do that? Let's be real ... you only make a fixed … [Read more...] about How To Maximize Your 401(k) Contribution
Which is really the better option - Should I pay off my mortgage early, or look for higher yielding ways to use my money responsibly (like investing it, paying down down debt, etc.)? It's a financially responsible question I believe most people ask themselves at some point; especially when they find themselves with some extra cash that they'd like to put to good use. More than once after my wife and I have found ourselves with a new raise or bonus, we've questioned whether it would smart to use that extra cash to pay off some additional mortgage principal every month. Why is that? Because eliminating your monthly mortgage payment has classically been accepted as almost a sort of "pre-requirement" to achieving financial independence. … [Read more...] about Should I Pay Off My Mortgage Early or Not?