Retire Early Home Page Discussion Board

[benmichaelx]

I'm 30 yrs old and am saving for early retirement however I've realized most of my money is being diverted to tax deffered accoutns like 401ks and Roth IRAs. However I wouldn't be able to use that money penalty free until I'm 59+.

If I retire at 50 how much should I put in taxable accounts that I will be able to draw on during the first 10 years of retirement.

Is it just as simple as saying 25% of my retirement savings should be in taxable accounts? (Since 10 years is approx 25% of my retirement life)

[arrete]

However I wouldn't be able to use that money penalty free until I'm 59+.

Actually that's not true.  See intercst's homepage on how you can withdraw money from an IRA before 59 1/2

http://www.retireearlyhomepage.com/wdraw59.html

arrete

[tmeri]

[yakers]

A couple things make this slightly complicated. Taxes and penalties are to be avoided. If you expect to have a lower tax rate later then deferring taxes is good. Put as much as you can into your 401k/IRA. (If you expcet taxes to be higher, use a Roth). Then if you retire before age 59.5 there are 72t withdrawals. This will help you tap the retirement funds but it is a very structured withdrawal system and you want to plan around it and have some other flexible funds. As to moving funds from equities into more accessable funds like money markets, there are a lot of ways to do this including holding CD ladders, bond ladders, and just selling some equities or bonds each year and using a money market. I have some ibonds that can be accessed for cash if necessary.
But I don't think there is a set percentage that should be in a taxable account.