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Originally Posted by kepp
I'll start by saying I know this topic has probably been covered multiple times, but I don't feel like picking through 50 pages.
Recently the wife and I started considering the possibility of early retirement. I think we could have the funds in place to do it at say 55 years of age. The problem (at least I see it as a problem) is that all of what we've saved so far is in 401k accounts which aren't accessible without penalties until we are of retirement age (correct?).
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Right. 59 and 1/2 is the withdrawal age. Withdrawal before that can be done, but you will pay a 10% penalty on top of the ordinary income tax that you will pay for the money.
It depends on your financial situation, of course, but you can view this as a 4.5 year period for your 401(k) to continue to grow while you are relying on other savings. That money needs to last the rest of your life, so the later you tap it, the better, in some respects.
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So my first question is, what do I do about that? Do I start to shrink my 401k contributions and open a personal trading account and invest in similar mutual funds that our 401ks are in, or are there better things to do?
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Right. You need to invest in non-retirement accounts. These will NOT grow tax deferred, of course, so sales will require payment of cap gains taxes as well as transaction fees.
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Also, I want to dabble (a couple thousand $) in trading. What is the best DIY online service? From what I've read so far, TD Ameritrade and Charles Schwab are highly rated.
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For that I will defer to others.