Wondering if there is anyone on here that has retired early (FIRE Movement)

[bozeman]

You can miss many joys in life when you always look ahead to retirement. Enjoy life now! Also, what about building generational wealth? You may have enough for you and your spouse to retire, but have you set your children up with brokerage accounts (or other) in their names to take advantage of compounding interest? I hope to retire from secular job, but not from my calling in life.

 

[MCS]

Tax-advantaged retirement accounts include Roth IRAs, which doesn't give the government a penny after you pay the initial tax. Health Savings Accounts don't give the government a penny at all if spend on health expenses. It's a pretty obvious strategy for a young person to put money in those accounts. I think dissuading people from tax-advantaged accounts is pretty horrible advice.

You can't put enough money into a Roth account to retire very early. If someone wants to retire early you will usually have to put money into non tax advantaged account. Plus you have to be 59 1/2 to use the money from your Roth

 

[Crusader]

That's a good outlook. Just don't call rentals "passive income". I'm in the service world and have seen what nonsense residential renters do to homes they don't own. It may be good money, but it's not passive. I'd rather go to work. But that's just me.

This is very true. Rental properties require maintenance and oversight. My BIL (68 y/o and retired from his full-time job several years ago) has five starter house rental properties and he is often at one of them doing some type of repair. Lots of headaches. I guess you can farm that out to a management company but then they're going to require a nice chunk of your rental income for their services.

 

[william schmaltz]

That's a good outlook. Just don't call rentals "passive income". I'm in the service world and have seen what nonsense residential renters do to homes they don't own. It may be good money, but it's not passive. I'd rather go to work. But that's just me.

Drafting a good contract takes care of that problem. Or at least makes sure you're covered. I also don't buy low end rentals and target all vacancy advertisements towards military and military families.

 

[wingmaster]

What's the income cap for a Roth? How much can you put in per year? How long does one need to stay on the hamster wheel maxing a Roth until legally allowed to touch that money?

If you think telling people to take charge of their own retirement strategy and not have the feds dictate when they can use their own cheddar is misguided...then sure, terrible advice

If you want to pump $6k a year into your Roth, be disallowed once you surpass the income limit, and then not be able to touch your own money til you're 59.5 years old...have at 'er.

The short answer to your question is that you can touch it immediately, you can touch your contributions tax-free and penalty-free with no waiting period. Once your income surpasses the contribution threshold, then do a Backdoor Roth. The 59.5 year old rule is for withdrawing your Roth earnings. There really is no downside to the account, which is why it's astonishing not more young people are taking advantage of it.

 

[CorbLand]

What's the income cap for a Roth? How much can you put in per year? How long does one need to stay on the hamster wheel maxing a Roth until legally allowed to touch that money?

If you think telling people to take charge of their own retirement strategy and not have the feds dictate when they can use their own cheddar is misguided...then sure, terrible advice

If you want to pump $6k a year into your Roth, be disallowed once you surpass the income limit, and then not be able to touch your own money til you're 59.5 years old...have at 'er.

They are a strategy that should be used until you cant though.

There are many different ways to get to the end and not just one is right. Not everyone is willing to take the risk of rentals, or starting their own business. For those, putting 6500 a year into a ROTH is the best choice. For many Americans, they will never reach the income thresholds.

 

[william schmaltz]

What's the income cap for a Roth? How much can you put in per year? How long does one need to stay on the hamster wheel maxing a Roth until legally allowed to touch that money?

There is no true income limit on a Roth. Dave Ramsey could've informed you on that We've done backdoor Roth with no issue even though we're beyond the income cap. Since then, we've changed up our plan and we personally now only put up to company match into those types of accounts and invest into other items that allow us to access and move money.

What is best for each person/family is extremely personal and requires a comprehensive look at their other investments, pension, goals, lifestyle, and income. Having arguments with strangers about what retirement strategy is best and then telling them what is best for them is beyond a waste of time. Threads where people give examples of what they're doing and why are helpful and I think that's the purpose of the OP.

 

[MallardSX2]

Age 55. Thats my number. I will answer to no man after that.

 

[ianpadron]

The short answer to your question is that you can touch it immediately, you can touch your contributions tax-free and penalty-free with no waiting period. Once your income surpasses the contribution threshold, then do a Backdoor Roth. The 59.5 year old rule is for withdrawing your Roth earnings. There really is no downside to the account, which is why it's astonishing not more young people are taking advantage of it.

There are multiple downsides...listed in my original response.

Young people are better off opening a brokerage account and buying cashflowing, tax-advantaged assets with the gains.

A backdoor Roth simply ties up more earnings til 59.5, and handicaps your ability to leverage your income fully.

What kind of $$$ does a Roth, traditional or backdoor, spin off monthly and how does that get anyone off the hamster wheel prior to age 60?

 

[ianpadron]

There is no true income limit on a Roth. Dave Ramsey could've informed you on that We've done backdoor Roth with no issue even though we're beyond the income cap. Since then, we've changed up our plan and we personally now only put up to company match into those types of accounts and invest into other items that allow us to access and move money.

What is best for each person/family is extremely personal and requires a comprehensive look at their other investments, pension, goals, lifestyle, and income. Having arguments with strangers about what retirement strategy is best is beyond a waste of time.

Traditional vs backdoor makes zero difference, the downside is the same...investing your own money and generating ZERO cash flow in the process.

Cash flow is absolutely king.

Good work on the pivot out of a Roth, I too was fooled early on until my real estate mentors showed me the light.

I understand the issue with making blanket statements regarding personalized retirement planning...however, anyone who claims that traditional retirement vehicles are the best bet simply do not understand real estate and private banking.

 

[ianpadron]

You can't put enough money into a Roth account to retire very early. If someone wants to retire early you will usually have to put money into non tax advantaged account. Plus you have to be 59 1/2 to use the money from your Roth

Guys will defend Roth IRAs and 401ks til they are blue in the face.

Anything past company match (best money is free money) is simply putting money in jail.

Stuck in the exact matrix that built those "retirement" vehicles.

"Make sure you stay workin' hard til 59.5 so you can use all that tax-advantaged money boy, ya hear?!"- the gubernment

 

[MallardSX2]

Lot of tortoise and hare action to be seen here.

 

[Gutshot007]

And lastly for you lucky big risk takers theres always the casino or lottery . Though not recommended . Interesting to hear other folks opinions . I would not want to own rentals or apartments . Sounds like too much maintenance. Worked with a plumber that built a duplex every year and took nothing from them and after 30 years owned them all free and clear .lived of his rental income, but some maintenance headaches

 

[ianpadron]

And lastly for you lucky big risk takers theres always the casino or lottery . Though not recommended . Interesting to hear other folks opinions . I would not want to own rentals or apartments . Sounds like too much maintenance. Worked with a plumber that built a duplex every year and took nothing from them and after 30 years owned them all free and clear .lived of his rental income, but some maintenance headaches

No one serious about real estate as an investment self-manages.

That's basically rule #2...

A good PM is worth the 6-10% they charge to screen tenants and deal with day to day operations.

No idea how real estate is viewed as risky while stocks are low risk...makes zero sense.

Long term S&P goes up, just like rent and prices...momentary shit shows are all but guaranteed and the same due diligence applies to both to keep you out of trouble and hedge risk...

Buy low, sell high...but the beauty of real estate is that there are far more tax advantages than the stock and commodities markets.

 

[MallardSX2]

Guys will defend Roth IRAs and 401ks till they are blue in the face.

Anything past company match (best money is free money) is simply putting money in jail.

Stuck in the exact matrix that built those "retirement" vehicles.

"Make sure you stay workin' hard til 59.5 so you can use all that tax-advantaged money boy, ya hear?!"- the gubernment

I knew a guy who had a bunch of money handed to him to get started in life. He does good. He should, most of it was handed to him to get started.

He talked just like you and talks down to people who have real jobs and 401K's all the time.

 

[william schmaltz]

I understand the issue with making blanket statements regarding personalized retirement planning...however, anyone who claims that traditional retirement vehicles are the best bet simply do not understand real estate and private banking.

There are multiple downsides...listed in my original response.

Young people are better off opening a brokerage account and buying cashflowing, tax-advantaged assets with the gains.

A backdoor Roth simply ties up more earnings til 59.5, and handicaps your ability to leverage your income fully.

What kind of $$$ does a Roth, traditional or backdoor, spin off monthly and how does that get anyone off the hamster wheel prior to age 60?

Again, you are talking in absolutes and not taking into account the uniqueness of each individual. Some people the headache simply isn't worth it and a Roth is best. Good for them for knowing what's best for them. You've made your point; you hate traditional retirement and love real estate. We get it, move along.

Everyone is different. Some people have plenty of coverage prior to age 60 so they want to diversify into traditional stuff like a Roth. Diversification is a good thing. There is a good chance that the government will try taking 50% of my investment income in 20 years. I'll be happy to be able to pull from the Roth and leave the others to grow at that point. I don't have a time machine so until then I will diversify.

 

[svivian]

Again, you are talking in absolutes and not taking into account the uniqueness of each individual. Some people the headache simply isn't worth it and a Roth is best. Good for them for knowing what's best for them. You've made your point; you hate traditional retirement and love real estate. We get it, move along.

Everyone is different. Some people have plenty of coverage prior to age 60 so they want to diversify into traditional stuff like a Roth. Diversification is a good thing. There is a good chance that the government will try taking 50% of my investment income in 20 years. I'll be happy to be able to pull from the Roth and leave the others to grow at that point. I don't have a time machine so until then I will diversify.

100% agree well said

 

[ScottRK]

I retired at 55 not in my 40’s. I traveled for work 2-6 days of the week the last 10 years. The pension covers everything, so why continue. Also my wife’s been on the same money page as me since we’ve been married. I get to spend time with my kids that are still in school.

I spent enough time on standby at home to know I wouldn’t be bored. If we lived in town or in an apartment I might feel different about that.

 

[RO1459]

My wife and I both retired at fifty. At fifty-two we opened a restaurant because we were bored to death. Yes, even with all the travel and trips, we were bored. All our friends were still working so we were alone during the week, trips and travel. We kept the restaurant for 12 years, sold it and then retired for good. 62 was a good age to retire. Now 75, in good health and enjoying life like never before.

 

[ianpadron]

Again, you are talking in absolutes and not taking into account the uniqueness of each individual. Some people the headache simply isn't worth it and a Roth is best. Good for them for knowing what's best for them. You've made your point; you hate traditional retirement and love real estate. We get it, move along.

Everyone is different. Some people have plenty of coverage prior to age 60 so they want to diversify into traditional stuff like a Roth. Diversification is a good thing. There is a good chance that the government will try taking 50% of my investment income in 20 years. I'll be happy to be able to pull from the Roth and leave the others to grow at that point. I don't have a time machine so until then I will diversify.

How much would the government be legally allowed to take if you were to claim bonus depreciation every year you buy a new piece of real estate?

That's my point...if people truly understood the multiple benefits...they'd stop pimping government endorsed "wealth-building" strategies.

Appreciation, leverage, cash-flow, tax sheltering, principal pay down...no other asset class offers the one stop shop of building generational wealth...

Throw it in a trust and lend against it...now you're pouring rocket fuel on your $$$

I thought this thread was about getting out of the rat race early, not crawling to the finish line at 60...