3 Ways to Retire Early (That You Might Not Know About)
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- čas přidán 4. 09. 2024
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Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.
Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
How do I get involved in this? I am excited to take part because I genuinely want to build a stable financial future. Who is the main inspiration behind your accomplishments?
Annette Christine Conte is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for sharing, I must say, She appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive.
I've kept much of my savings in cash for safety, but I'm unsure if it's right for retirement. Contemplating investing $400K in stocks, as I've heard investors can profit in tough times. Unsure about my next move.
It's impressive how much you saved during your working years, a feat not many achieve in a lifetime. Now that you're retired and rely on your investments, it's wise to redistribute your capital to mitigate risks during market fluctuations. Consulting a financial advisor can help simplify this process.
Yeah, I’m also closing in on retirement, and I have benefitted much from using a financial advisor. I didn’t really start early, so I knew the compound interest of index fund investing would not work for me. Funny how I pulled in more profit than some of my peers who have been investing for many years.
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
Rachel Sarah Parrish is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for sharing, I must say, She appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive.
My husband and I were fortunate enough to be able to pay off our mortgage early. We were both still working, and took the payment amount that we had been using to pay off our mortgage faster and we put it straight into investments. We were able to retire early because of almost 7 years of putting away what would have been our mortgage payment as well as maxing out our 401K/403B plans. Thankfully we were taught by both of our parents the value of living within our means. Thank you for your advice. I know it will help people. we are interested in investments that could set me up for retirement , I mean I've heard of people that netted hundreds of thousands during these crash, I listened to someone on a podcast who earned over $650K in less than a year, what's the strategy behind such returns?
Investing without proper guidance can lead to mistakes and losses. I've learned this from my own experience.If you're new to investing or don't have much time, it's best to get advice from an expert.
Even with the right strategies and appropriate assets, investment returns can differ among investors. Recognizing the vital role of experience in investment success is crucial. Personally, I understood this significance and sought guidance from a market analyst, significantly growing my account to nearly a million. Strategically withdrawing profits just before the market correction, I'm now seizing buying opportunities once again.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.
Deborah Lynn Dilling is the licensed advisor I use.Just research the name. You'd find necessary details to work with to set up an appointment
Bo is excited. This is going to be good. 😂
Not just excited. He’s SO excited 😂
I think this has been the best video of when/why a financial advisor could be useful. Save money and invest in index funds is easy. Knowing which strategies and paperwork to convert and withdraw is a little more complex.
their pitch is a meme at this point. this "Complexity" you speak of could be hashed out with a few hours of advice. In no way is 1-2% of assets yearly needed.
@@SilverCpa Well they've also made a video on the different types of financial advisors, so you're free to choose the one that fits you best. Doesn't have to be AUM.
They are pretty open about when someone needs one and admit that most don’t.
@@GreggSadler literally nobody does. Only clueless doctors and lawyers usually enlist their services. Anything you need to know can be learned from a few books and a weekend on youtube. even just 1% eats 28% of total gain over decades. Reverse compound interest. Their sales pitch is a meme at this point.
@@emoney1231 AUM is for clueless emotional people.
This has been the best early retirement video your team has put out!
I must say I love dividend investing, getting those payments in for just holding a company is amazing. from what I've witnessed it all comes down to having a Licensed investment Adviser to handle your portfolio. All thanks to mine who has traded my savings daily from quarter a million to almost one million dollars in the last 9 months.❤✅
Amazing ! I have Liquid Cash I want to put into stocks, but I want to ensure good profits & safety. Care to share how you achieved such milestone.?
Essmildaa Morgan is well known, just look her up
Thanks, Looked her up, I can see her profile here on the web, will send her a well articulated mail. I hope she finds space in her schedule to help me.
Essmildaa Morgan is finally getting the popularity she deserves and this docent come as a surprise. my favourite stocks are Amazon,Walmart, Visa & Telsa
Consistently investing in quality dividend paying companies with the right guidance over the long term is a relatively easy plan to create generational wealth.
I love watching this as a 22 yr old
Only works if you actually do it though!
Yass Awesome!!👏🏻👏🏻👏🏻
Crush it dude!
It's recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 20% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of compound interest and potentially grow your retirement savings over time.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
@@joshbarney114 I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you on things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Marisa has the appearance of being a great authority in her profession. I looked her up online and found her website, which I reviewed and went through to learn more about her credentials, academic background, and employment. She has a fiduciary duty to protect my best interests. I sent her an email outlining my objectives and also booked a session with her; thanks for sharing.
The idea of investing a significant sum of money may be both thrilling and intimidating. There is potential for considerable wealth increase with the correct strategy. How can one take advantage of compound interest and potentially grow your retirement savings to about $1M over time?
I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850
impressive gains! how can I get your advlsor please, if you dont mind me asking? I could really use a help as of now
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "LUCIA ALICIA CRUZ" I've worked with her for years and highly recommend her. Check if she meets your criteria.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
"You need to know, what's the age you turn 55?" - The Money Guys
55 😂
Yeah that was funny
for most people i wouldn't mess with the whole 72 thing, or pulling basis from the roth. the easiest thing is to set your retirement accounts up so that if you have nothing else, you can retire at 60. then put anything extra you can into regular brokerage account and use that to retire early whenever you have enough to more than bridge to 60+ years old.
Unless you got 7 figures in your 401k and 5 figures in your brokerage account. Thats when the rule of 72T comes in so you can tap into that 7 figures several years before you turn 59 1/2. 👍🏽
The Plan won’t actually say “We allow the rule of 55”, my experience is that the plan documents will have key paragraphs that, 1. Allow funds to be left in plan after separation from employment, and 2. Allows withdrawals from those funds.
The Rule of 55 is more a matter between the taxpayer and the IRS, at the time the taxpayer files. Did you follow the IRS rules?
Ha. Almost verbatim what my government Plan says
I know someone who's plan didn't allow for rule of 55 withdrawals. It happens
they finally talked about the ladder, but then assumed you'd still be working for an income while laddering, but then talked about taxable bridges in the same video
I don't understand what they mean by it being unrealistic, you continue conversions until your taxable bridge is exhausted.
I did 3 Roth conversions but stopped because I live
In CA and earn well into 6 figures and don’t want to keep paying CA state income tax, especially since I won’t retire in CA.
These withdrawal strategies are the reason why 99% of those pursuing FIRE should ONLY fund Traditional IRA/401k and never bother with Roth
Most probably make too much to get the trad IRA deduction so Roth makes sense for that. Also mega backdoor if that's available to you. I had a small trad IRA balance that was keeping me from doing MBDR so when the covid crash happened I converted that to roth. It's about knowing the available strategies and then looking for opportunities to apply them given your individual situation.
I started a 72t on one of my IRAs at age 56 as I was in my glide path to retirement. Worked well for me so far. Will be done after 5 years, but can access my other retirement accounts at 59 1/2.
Did you pay a financial advisor or a good tax pro to help you?
@@willflo11 thanks for asking. I am a DYI, and before starting this process, I read up on the process thoroughly and quadruple checked my calculations then proceeded. The most difficult thing with 72t is reporting the withdraw properly at tax time. But again, with doing research on the process, I am confident I am doing this correctly.
@stevemlejnek7073 thanks! I'll probably start deep diving reddit threads on the topic soon.
To be clear, the rule of 55 also works at age 56, 57, 58 and 59.
In regards to the rule of 55, How is it tax advantaged if you pull it out during your working years, where you have to pay a higher tax rate? Opposed to leaving it in and taking it out when you have retired and are in a lower tax bracket.
All the scammers in these comments... smh
So happy I found these guys as a 6 month old
Solid info in the show. Thank you for the details you guys go into on these videos.
The Money Guys, could you do a chat on a very challenging question & topic not widely discussed (probably due to it being super tough to address): how to retire and spend (as much as possible, leaving as little as possible) for singles, those without a dependent, those who do not wish to leave a legacy. What are some possible strategies?
You need someone else to tell you how to blow your life savings on women, drugs, and gambling in old age?
@@kratostomatoes8587 ：）good idea :) and maybe not just women (these days...) and I'll factor those in hahah ...
@@kratostomatoes8587 - And waste the rest...
For the Roth conversion ladder, you can bridge the 5 years with after tax account and Roth contributions. Especially if you have access to mega backdoor Roth.
The rule of 55 does not state how the 401k distributions are handled. Some plans only allow a full distribution before the age of 59.5.
Great episode! What are some tips for financial planning when recieving 100% P&T VA compensation?
I must have missed the answer Brian, what is the age that I turn 55?
I’m working hard to grow my brokerage account to have a comfortable bridge before RE!
I did not know about the Roth 401(k) gains being taxed when using rule of 55 and 72(t)! Thanks for clarifying. Glad I found out now instead of at 55 😬
Thank you for this video! We are ready to retire in a couple years and we are 46 and 47. Question, can we work part time until age 55 and take advantage of this rule of 55 withdrawals? Thank you!
Get a powerful financial focused ai, or pay a flat fee for an advisor to map out your goals. Of course you can do your own search as well. In my opinion, the answer is almost always both. Bridges are awesome, and they are better when you can use them yourself.
There seems to be a lot of confusion about rule55 and whether 401K accounts "allow" it. Rule55 is an IRS rule, so it applies to all 401Ks. The question is whether your 401K allows partial distributions. Some 401Ks require a lump sum distribution. You could still do a rule55 withdrawal but you can only do it once. You'd have to roll the remainder of the account you don't want into an IRA, which you wouldn't be able to access.
I wish you would have gone into details about plan compatibility with the rule of 55. My employer doesn't allow partial distributions until 59 1/2 so at 55 your only choice is to withdraw the entire balance which is a tax bomb
You should research the rule of 55 so that you understand it. Most employers do not allow employees to retire using the IRS rule of 55. This rule only applies to 401K and certain government workers such as police and firefighters. You can withdraw a monthly amount such as $3000 instead of a full cash out of the portfolio. The reason to invoke the IRS rule of 55 is to avoid the 10% withdrawal penalty before age 59 1/2. The withdrawals will still be taxed at ordinary income tax rates but no 10% penalty. You will need to ask your employer plan administrator first if the IRS rule of 55 is an option.
I hadn't thought about splitting up your 401k accounts so you'd only do 72(t), that's a good idea. My thought was to just put everything in one IRA, 72(t) that, and then either pull some out of the brokerage or put extra in there depending on my needs. I'm enough years out from FIRE that I haven't made firm plans, but this will be a good tool to keep in mind. Though I agree that this may be an academic exercise in figuring out. I have several years of expenses in my brokerage account, so the Roth conversion ladder may make more sense for me, do the conversion while I use my brokerage account to cover expenses.
How do you avoid double taxation from a retirement account though when you are a American living in another country. For a Roth IRA while America wouldn't tax you the other country would and if you have a retirement account in the other country then visa versa. Wouldn't a after tax account with the foreign income tax credit be better??
How does the other country tax your Roth IRA?
You have to take a look at the tax treaty documents for your host country. Most can be found online. From my personal knowledge I can say that last I checked France will treat a Roth IRA as tax free but Portugal will not.
@@Username_CC_ You typically have to submit your IRS filing to your host country. Roth withdrawals, while tax free, still have a paper trail. As a US citizen, you are always required to file with the IRS every year regardless of where you are living (but it doesn't necessarily mean you will have to pay taxes to the US every year depending on your situation).
It’s not double taxation in a situation when you paid taxes on your money which was used to make Roth contribution, you might be able to get tax credit from the country where you resided at the time. So by the time you get Roth distribution, it’s tax free for US but the country you are residing in can access income tax off it.
Even in the situation where you did not get any foreign country tax credit when you made Roth contributions, you cannot count on other countries for not taxing you for Roth distributions since those countries made zero promise that they would recognize Roth and honor this on their tax codes.
Invest judiciously, keep a stop loss figure. Shuffle between debt and equity wherever the ratio goes too off your target. As for the target, I recommend a Ratio like this Debt % should be equal to your age in years. If you are 20, debt is 20%, reset in equity. If the market falls or rises drastically, your debt % will change, which you should rebalance to 20% and bring back equity to 80%. Thus you would have bought low or booked profit depending on if it was a crash or a bull run.
RULE OF 55 bombs not mentioned: Get an in writing response from your employer confirming the plan allows early withdrawals. ALSO get confirmation that the plan allows partial distributions as opposed to requiring a LUMP sum only distribution. Critical for planning. If your only option is LUMP sum you might set off a massive tax bomb. Especially if the majority of your assets are pre-tax. DON’T DO IT! This is a recording.
You forgot to mention the fact that the Roth conversion ladder only works if your assets are in an ira before converting it. Can't go straight from a traditional 401k to a Roth ira. That's my understanding anyways.
Do you have to be retired to take the 72t distributions? Or could you take these from an IRA while maxing out a 401k with your employer?
Great show n
Rule 55 any exceptions for layoffs. I turn 54 this year and may be laid off.
72T
That’s terrible. I wonder if you get laid off, if instead they can keep you on the payroll (employed) and just change your income and benefits to $0, until you turn 55 and can start taking your 401k.
I'd look into 72T distributions like the other person said. 72T distributions are substantially equal payments from the retirment accounts so they basically become annuities. Im not sure how difficult it is though. Some people online say it's kind of complex while others say it's fairly easy.
Good news is that you just need to make it to the YEAR you turn 55. I was laid off December last year and am now using the rule of 55 to retire early. I was already 56 so lucky that way. Good luck!
The rule of 55 is applicable earlier, but only for people that work, mostly, in public sector jobs like police, fire persons, etc. it’s a simple google search.
Solid video. But from the thumbnail, I thought you were finally going to talk about Coast FI.
I would like to see a video on this topic.
Same, looking deeper into this subject
I am in my 40s and switched to mostly Roth contributions. Sometimes i wonder if im making a mistake because when i retire in 25 years, it seems inevitable that we will all be paying very high tax rates because of our national debt, the way the government likes to spend, and the cultural movement towards more faith in socialist policies.
That’s why you should be making Roth contributions. To avoid the higher taxes.
Also, inflation is underreported meaning that the tax brackets don’t go up as high as they should pushing more of your future investment income into higher tax brackets than what they should be in.
Roth is the way to go.
Also in my 40s, switched to all roth, 401k and ira
Is there any issue with re investing the money from a 72T distribution? Can I start taking money before I retire and invest it in another account to build a 3-4 year buffer.
So ultimately there is not a good way to withdraw from Roth IRA earnings prior to 59 1/2, correct?
29:34 My mind went immediately to Bryan and Bo twirling torches in a hulu outfit lol
Some advanced topics but good to be aware of
Great video! Would love to hear thoughts on just paying the penalty on early 401K withdrawals. Not ideal, sure, but if you don’t want the commitment and risk of a 72t, it does exist as an option.
It's a shite option though, and unnecessary if you do even a minimum amount of planning.
@@dragoncat5836 is it though? A tax advantaged account even WITH the penalty can outperform a post tax one. For a 72t, even with a moderate amount of planning, things can simply change if you’re trying to bridge a large span. I’d personally rather eat a smidge in fees if it meant earlier FE. But I get your sentiment.
If you use rule of 55 can you roll those assets into a rollover ira or does it have to stay in the 401k…just wondering because of fees.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Check with your employer that they support the 55 rule. I found out mine did not when I left work. I was fine as I didn’t need the 401 k money.
It's about darn time you covered this stuff, lol. Now go more in depth about situations where you might want to use different strategies :P. Also y'all need to stop assuming all the FIRE people have RSUs... Many of us make very average salaries but still manage to do stuff like MBDR at least to an extent. We just aren't usually the type to go to a financial planner in the early stages.
I know FIRE. What is FINE?
Financial independence, next endeavor?
What if your next endeavor is playing video games and abandoning the use of pants?
I'm curious, for someone with around $50,000 to invest, how would you recommend we enter the market? I am looking study some traders and copy their strategy rather than investing myself and losing money emotionally. What's your take on this approach?
It's all about finding the right moment to take advantage of and generate colossal profit, which is why you need to do your research.
Even with the right technique and assets some investors would still make more than others, as an investor, you should’ve known that by now, nothing beats experience and that’s final, personally I had to reach out to a market analyst for guidance which is how I was able to grow my account close to a million, withdraw my profit right before the correction and now I’m buying again.
Who is the coach that provides guidance for you? I urgently require assistance; my stock portfolio is stagnating, and I need investment advice for retirement.
Monica Shawn Marti is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
I'm impressed with the recommended advisor's prompt response and expertise. Their clarity and professionalism instilled confidence from the start. Excited to explore opportunities together!
When my dollars are working harder than me I don’t want to pay taxes on that. Roth FTW
Just remember: Roth aren't "tax free" they're "taxes paid... at my higher marginal rate"
Traditional are tax free going in, tax free growth, tax free coming out up to your standard deduction (completely tax free!)
See also: Traditional are larger contributions with "taxes paid at your lowest tax brackets first"
24% Roth tax > 24% Traditional tax because you pay some at 0%, some at 10%, some at 12%, some at 22%, instead of all at 24%
What if I’m trying to do this at 19?
72t and 54/55 make sense?
Buy a good LTD policy and develop renal failure? It worked for me!
Can you create a solo401k and rollover into it to meet the rule of 55?
Great question, the solo 401k rocks. I have this same question.
Can you use the rule of 55 when you are older than 55?
Yes
Step 1: do not throw away 1-2% per year of your assets to a financial advisor.
Agreed. I am in the market for a competent CPA. Well worth the coin at this point!
Things change so fast. Do you know how old I was when I was your age? 😉
If I am waiting for a pension, I can never retire early without penalty....But I feel I will have enough in 3 years if I can get my full pension and investments and being able to delay taking SS until 67. But just found out I have to wait to 62 for full pension. 😢
You guys are getting closer to understand FIRE. Some comments.
Yes, many FIRE people have large after tax accounts. Yes, they will convert 401k to Roth when they have no earned income. No, they will not spend Roth before their after tax money. I mean come on.... These people are smart, that's how they made this money and setup their early retirement system in the first place.
what about annuities???
💜
You insist on 55 so much you almost make it sound like you don't qualify at 56 and later...
72(t)
Most people don’t ever have a seven figure 401k
Rule of 55
I don’t think people that are retiring really care about their tax brackets…people want to know how to maximize their savings and investments…how to generate passive income…at the end of the day it’s all about cash flow…the rest is all noise…thanks
😂😂
This... ...is incorrect.
Yikes! I really hope you’re joking. Not care about taxes?!?! So if you have a million dollar portfolio when you retire, you don’t care whether you pay 0% tax (possible with careful planning) or 20% tax? Haha
I wish you would have gone into details about plan compatibility with the rule of 55. My employer doesn't allow partial distributions until 59 1/2 so at 55 your only choice is to withdraw the entire balance which is a tax bomb
Worth asking if they can get that changed. I talked our plan administrator into adding MBDR!
@@dragoncat5836What does MBDR stand for?
@@vanguardvaluist2614 he likely means Mega Backdoor Roth, a different feature of 401(k) that allows you to make Roth IRA contributions when your income is over the limit to contribute the normal way.
@@dragoncat5836 I'm trying. They say I was the only one that cared (smaller company) but we have quite a few employees in their late 40s and 50s so I am trying to educate them that it's not only about choosing to retire early, but also having a cushion if you lose your job after 55
@@vanguardvaluist2614 Mega backdoor roth