Withdrawal calculator

[Bonasababy]

yes

Ditto.

When you sit down with retirement planners they will talk about different sources and how you want to draw from each to minimize taxes in retirement. Having some in Roth is a great benefit there.

Roths are also great for covering large unplanned expenses that if pulled from pre tax funds would raise your taxes more...going into a higher tax bracket for a lot. Also can raise what you have to pay for medicare.

 

[Robg2]

I get it but still question the value to the average person.

4x poverty level is around 86k for two people. Not a great deal of $$ and I might question whether people who can do that have enough in their Roth and/or other retirement accounts to last 30 ...or maybe 40 years, if retiring before 59 1/2.

More power to you if you can do it. I can see it while one of a couple is still working maxes out any retirement plan match and more along with drawing roth contributions to allow you to get cheaper ACA coverage, assuming the workers health coverage isnt better than what ACA choices offer.

I guess the broad point I would make is you better be thinking...and planning in detail carefully...of long term impacts if you take Roth contributions out early.

Methinks you are over thinking it. For health insurance costs you only have to make it to 65, then Medicare will kick in.

My main point is that people that want to retire early should be thinking of ways to get a big Roth in addition to however they were planning on funding their retirement. Then tax-manage their retirement income to avoid huge expenses like health insurance. If you want to do this, start planning now to build your Roth.

 

[SAJ-99]

Retirement advice from fidelity. Probably ignored at 25, dismissed as wrong at 30, and obvious once you hit 35.

How much money should I save each year for retirement? | Fidelity

The short answer is that you should aim to save at least 15 percent of your income for retirement and start as soon as you can. But there's more to the story.

www.fidelity.com

 

[sigpros]

That is some great info. My son has started (19) as a college student he is doing the best he can but with Fidelity it's easy for him to throw an extra $25 in when he has it

 

[SAJ-99]

That is some great info. My son has started (19) as a college student he is doing the best he can but with Fidelity it's easy for him to throw an extra $25 in when he has it

Starting early is key. To be honest, I don’t think I could have saved 15% of my salary at 25 and ate.

 

[LopeHunter]

Methinks you are over thinking it. For health insurance costs you only have to make it to 65, then Medicare will kick in.

My main point is that people that want to retire early should be thinking of ways to get a big Roth in addition to however they were planning on funding their retirement. Then tax-manage their retirement income to avoid huge expenses like health insurance. If you want to do this, start planning now to build your Roth.

Am on Medicare. I am on traditional (PPO-like) rather than Advantage (HMO-like).

My spouse and I are both on Medicare.

I budget a combined $25,000 a year for health coverage (doctors. hospitalization, ER, urgent care, Rx premium/deductible/co-pay/uncovered), dental and vision).

Life has been good so were do not get Medicare subsidies which are baked into Medicare nor do we qualify for any assistance program tied to income but we instead pay a surcharge on Part B and Part D with IRMAA coming into play.

I retired before age 65 so had a couple of years on ACA and Medicare is less expensive by about $12,000 per year.

 

[Bonasababy]

Methinks you are over thinking it. For health insurance costs you only have to make it to 65, then Medicare will kick in.

My main point is that people that want to retire early should be thinking of ways to get a big Roth in addition to however they were planning on funding their retirement. Then tax-manage their retirement income to avoid huge expenses like health insurance. If you want to do this, start planning now to build your Roth.

Are you thinking medicare is free?

 

[Robg2]

Are you thinking medicare is free?

No, what I’m saying is that once you hit Medicare you don’t have to worry about losing your ACA subsidy.

 

[Mallardsx2]

Methinks you are over thinking it. For health insurance costs you only have to make it to 65, then Medicare will kick in.

My main point is that people that want to retire early should be thinking of ways to get a big Roth in addition to however they were planning on funding their retirement. Then tax-manage their retirement income to avoid huge expenses like health insurance. If you want to do this, start planning now to build your Roth.

No offense, but your above advice only really applies to people OVER age 59-1/2.

You need a large brokerage account to retire prior to 59-1/2 or a fair sized traditional 401(k) 72(t)/Rule of 55 (and a brokerage account to supplement your income but be sure to keep your taxable income under the ACA thresholds.

Bottom line is that you CANNOT touch a Roth tax free until 59-1/2……UNLESS YOU MEET VERY SPECIFIC CRITERIA.

 

[buckbull]

Since this has turned into a quasi retirement thread I have a new question.

I read that if you have over $150k FICA income in 2026 you have to put your $8K catch up (if 50+) in a Roth 401K

My situation is I have a company 401k (No match or company added money)
I cant do an HSA
I can't do a ROTH IRA

What I am doing now is 22% pre tax in my 401K

I do have a ROTH 401k option do I need to start putting some in a ROTH 401K so when I turn 50 I have a place for that $8K catch up to go and will have the ROTH going so the 5 year rule will be easily met?

Question 2

I have an after tax option for when I max the $24500 in my pre tax. I don't contribute to it now but this will be the first year I will max my 401K pre tax hopefully by the end of October. So should I turn that option on? The way I understand it, it take funds after tax puts them into my traditional 401k and then immediately rolls the funds over to the Roth 401K if you have one set up

And I appreciate the advice and everything I have learned from you all here. It has helped researching things a lot easier

And I even have my kids saving and investing so they can make smarter choices and not stand in a factory 72 hours a week like dad

if you cannot do a Roth ira due to hitting the income limit you can backdoor into one by creating a traditional ira and then immediately convert it to a Roth ira. No income limit doing it this way.

 

[sigpros]

if you cannot do a Roth ira due to hitting the income limit you can backdoor into one by creating a traditional ira and then immediately convert it to a Roth ira. No income limit doing it this way.

But a guy needs a Roth Ira to convert too. Which I do not have. I might be able to start one this year. About to take a month off to trap with my son when he comes home from college. So I will miss a bunch of mandatory OT.

 

[Steiny77]

I retired at 57 and simply lived out of our savings until we tapped the IRA at 59.5.

All our stuff is traditional, no ROTH.
Much more important than these traditional investment tools for us was using our high earning years to invest in things that would create long term streams of income in addition to the IRA, SS, etc.

 

[buckbull]

But a guy needs a Roth Ira to convert too. Which I do not have. I might be able to start one this year. About to take a month off to trap with my son when he comes home from college. So I will miss a bunch of mandatory OT.

I think you can open one, you just can't contribute directly. Backdoor the traditional to load it.

 

[Robg2]

Bottom line is that you CANNOT touch a Roth tax free until 59-1/2……UNLESS YOU MEET VERY SPECIFIC CRITERIA.

This is not true at all. You can withdraw your contributions (not earnings) after a five year period.

For example, do a couple big Roth conversions when you are younger, pull that amount out when you retire before 59 1/2. When you turn 59 1/2 you can draw from a traditional IRA up to the tax point you desire, the fill in the rest with Roth. It’s 100% legit.

 

[SAJ-99]

This is not true at all. You can withdraw your contributions (not earnings) after a five year period.

For example, do a couple big Roth conversions when you are younger, pull that amount out when you retire before 59 1/2. When you turn 59 1/2 you can draw from a traditional IRA up to the tax point you desire, the fill in the rest with Roth. It’s 100% legit.

This^
You can withdraw original deposited funds in a Roth at anytime for any reason with no penalty.
But I do not recommend it.

 

[brymoore]

This is not true at all. You can withdraw your contributions (not earnings) after a five year period.

For example, do a couple big Roth conversions when you are younger, pull that amount out when you retire before 59 1/2. When you turn 59 1/2 you can draw from a traditional IRA up to the tax point you desire, the fill in the rest with Roth. It’s 100% legit.

Yep. I was going to make the same post. 5 year hold on the account.

 

[Robg2]

This^
You can withdraw original deposited funds in a Roth at anytime for any reason with no penalty.
But I do not recommend it.

I think it depends, with the caveat that you have sufficient funds and a really good reason, such as avoiding the ACA subsidy cliff. But rather than spending more time on it I'll just say that if you want to retire early look into the advantages of a Roth and see if it applies to your situation.

 

[Bonasababy]

I think it depends, with the caveat that you have sufficient funds and a really good reason, such as avoiding the ACA subsidy cliff. But rather than spending more time on it I'll just say that if you want to retire early look into the advantages of a Roth and see if it applies to your situation.

As noted people should do some long term planning using conservate ROIs and inflation, not just look at the years between any early retirement date and 65.

 

[Mallardsx2]

This is not true at all. You can withdraw your contributions (not earnings) after a five year period.

For example, do a couple big Roth conversions when you are younger, pull that amount out when you retire before 59 1/2. When you turn 59 1/2 you can draw from a traditional IRA up to the tax point you desire, the fill in the rest with Roth. It’s 100% legit.

That's interesting.

I was told by many that you are subject to pro-rata rules if it is inside of a financial vehicle and you try to pull it from there prior to 59-1/2 using 72(T) or Rule of 55...