2011 Financial Goals
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Hey everyone. I don't post very often, but I'm so excited about 2011 that I just had to post about it.
This is the year that my net worth will hit $100k
I'm going to max out my Roth IRA contributions again this year
I'm considering upping the amount I'm putting towards the TSP (federal employee retirement plan) from 15% to something higher.
I'm going to continue investing outside of retirement accounts, probably on the order of about $2000 a month.
I didn't have to pay taxes for the majority of this year (I'm deployed to Afghanistan), so I should get a decent tax return (right?).
I have to get and furnish an apartment, something I'd like to do on the cheap (preferably free).
I think that's about it for this year. If I think up anything new I'll make sure to add it in an edit.
This is the year that my net worth will hit $100k
I'm going to max out my Roth IRA contributions again this year
I'm considering upping the amount I'm putting towards the TSP (federal employee retirement plan) from 15% to something higher.
I'm going to continue investing outside of retirement accounts, probably on the order of about $2000 a month.
I didn't have to pay taxes for the majority of this year (I'm deployed to Afghanistan), so I should get a decent tax return (right?).
I have to get and furnish an apartment, something I'd like to do on the cheap (preferably free).
I think that's about it for this year. If I think up anything new I'll make sure to add it in an edit.
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- TheWanderingScholar
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@M I'm totally down with doing something free to celebrate. Maybe I'll take a staycation and do some reading.
@AlexOliver You're probably right about the 15% thing, the contributions are kind of a vestigial thing from before I discovered ERE and I never really thought twice about it. Would you recommend ditching the contributions altogether?
@AlexOliver You're probably right about the 15% thing, the contributions are kind of a vestigial thing from before I discovered ERE and I never really thought twice about it. Would you recommend ditching the contributions altogether?
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To the OP: Before you change how you are allocating savings amounts, consider this. The rules regarding when you can access your retirement savings penalty free can be different between different plan types. The rule of 65 years old applies to 401k plans, but you have a TSP (not a 401k) - the rule with that may be different. For example I have a "457" plan - with this I can acess the money tax free as soon as I leave employment for any reason. Its possible the same holds true for you. Check with your HR representative at work, and do research online before you make any decisions.
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I wouldn't ditch the contributions, but looking at what you'll need in retirement. Then working backwards from that... like, let's say you have expenses of $12k a year and therefore need $300k in retirement. Working backwards, if you don't work for 20 years before you reach the age where you can pull it out...what amount would take 20 years to compound to $300k? About $50k. So if you plan to retire early/stop working in five years, save $10k a year. If you think it'll take ten years, save $5k/year.
Basically so you have a backup if all your money from the taxable accounts is gone, or much less than you thought it would be.
But I would definitely take up to the match if you have one.
Basically so you have a backup if all your money from the taxable accounts is gone, or much less than you thought it would be.
But I would definitely take up to the match if you have one.
Maxing out IRA's is most likely a good idea even with planned early retirement. In an ERE retirement, you are living off of savings which will be growing tax free in IRA. Even if you will be tapping IRA early, you will only pay penalty on the amount you withdraw. If you need this money, it probably means you have a very low taxable income even if you have a large amount of tax deferred income. The 10% penalty on the small (relative) amount you withdraw in a single year will be far less than the taxes you would otherwise have to pay in typical ERE situations.
You would always spend non IRA money first. Even if all of your money is tax deferred, you are only taking out about 3% so penalty is .3% and you are still paying no tax on remaining 97%.
Large purchases such as a house could screw this up but only if you manage to put most of your savings in a tax deffered account which is something that would be really hard to do in ERE mode.
You would always spend non IRA money first. Even if all of your money is tax deferred, you are only taking out about 3% so penalty is .3% and you are still paying no tax on remaining 97%.
Large purchases such as a house could screw this up but only if you manage to put most of your savings in a tax deffered account which is something that would be really hard to do in ERE mode.
There are also exceptions for pulling some money out of tax-deferred accounts early if you are paying for health care, education or buying a house. Plus there's the 72t rule for IRA's that lets you pull money out tax-free if you're retiring early. Just something to be mindful of, no need to completely disregard tax-savings accounts just because you want to retire very early.
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