Invest in a Roth IRA and Retire Early
I do not want to work until the age of 62. My plan is to invest in a Roth IRA and retire early. And when I say retire early, I mean well before the age of 62 or even 59. If I plan to work up until that age it will be because I want to not because I have to.
Roth IRA
What Is A Roth IRA?
An IRA is an Individual Retirement Account. A Roth IRA is a retirement account you set up, contribute to, and which grows tax free. A Roth IRA is funded with money that has already been taxed. It is funded with after-tax money.
Why You May Want to Invest in a Roth IRA So You Can Retire Early
You may already have a 401 (k) plan at work. You know that funding it means you cannot withdraw from your account without penalty until age 59 1/2. If you want to retire early, you can choose to invest in your 401 (k) for a certain amount and also invest in the Roth IRA. You can contribute more to a 401 (k) than a Roth IRA ($18,500 vs $5,500). You would pay taxes on your 401(k) once you withdraw it but no taxes on the Roth IRA. The Roth IRA can be your cushion until you can get your 401(k) contributions.
Invest in a Roth IRA If Your Employer Does Not Offer a Retirement Plan
If your employer does not offer a retirement plan, you should invest in a Roth IRA account. The maximum you can contribute is $5,500 annually or $458.75 monthly. Your employer’s failure to provide a retirement plan is not an excuse to not save for retirement. Even if you cannot save the maximum amount, save something. Maybe you can start with a plan to save $2,750 a year. This amounts to $229 a month or $52.89 a week.
My Plan is to Invest in a Roth IRA and Retire Early
I have never been big on working for 30 years unless it is something you want to do. There are plenty of people who truly love what they do and don’t want to retire. There are others of us who work to maintain a roof over our heads, for insurance and to save for our retirement.
I currently have money socked away for retirement. The balance I currently have won’t carry me into retirement but I have several years before I retire. The annuity I am in provides me with annual contributions into the account so the balance will continue to grow. Read my story here.
I’d like to retire in the next 8 to 10 years. However, I probably won’t fully retire. I will continue to do jobs here and there, maybe working for 6 months and then vacationing for the next 6 months. But the point is when I don’t want to work I shouldn’t have to and for me, my path now will be funding a Roth IRA.
$5,500 isn’t going to be a lot but let’s say I work for another 15 years. That’s $82,500 without any earnings. I could then work part-time or work for about six to eight months, build up my account and then take off the rest of the year. In essence, I may not be fully retired by partially retired.
Consider Investing in a Roth IRA
I would encourage you to think about investing in a Roth IRA. This may not be the best for everyone. But for me, it will work. I will also invest in some mutual funds outside of retirement to get gain me more money. There are calculators that you can use in order to determine if a Roth IRA is the best option for you.
Let me know what you think about this concept in the comments section or find my Facebook page, The Frugal Biddy.
It can be done! Due to years of saving in my retirement plans along with a couple of small real estate investments that provide income and sound advice from my financial planner of 30 years, I retired from my corporate job at the age of 58. I still would like to work part time doing something I love, but when i want to, not because I have to. I am taking a few years off to help take care of aging parents. I still live frugally because in 2 years my pension will be cut in half. I have no shortage of things to do to keep me busy, enjoy a full life and manage to have fun without spending much. I live in a small, vibrant town that offers free concerts in the park and other low cost activities, an arts and recreation center in the center of town and an awesome library, all of which I can walk or ride my bike to, providing additional savings. Living in a community with “walkability” is an enormous asset to folks of all ages, but especially to senior citizens and retirees.
Wow! Thank you for your comment and insight into your life. I am happy that you were able to leave at the age of 58. You have plenty of time to enjoy your life and do the things you want to. Even if you loved your job I believe that there are tons of things that people can do outside of work and I believe there are adventures we all want to do and so the time to do it is when you are retired.
I, too, have the same idea when I fully retire. Right now I am working because I can’t get my funds until I am 59 1/2. But I may still work here and there because “why not?” But I also may have residual income at some point. The point is I won’t have to work full-time, 9 to 5. I will be able to do what I want.
Congrats on your retirement!
Hi Takiia, I came across your info on the Money Mondays on BlackAmericaWeb.com. I’m definitely going to check out more of your articles. I’m always searching for positive real examples of women of color and influencers on wealth creation and preservation to refer clients to. I did want to point out that there is away to retire early prior to 59 1/2 without penalty. Not everyone should do it of course but depends on a number of factors like total amount saved and potential future income like pensions, social security, investment interest etc. but mainly the biggest factor is what it will cost to maintain the expected lifestyle for another 40-50 years including inflation. Unfortunately the Roth income limit will restrict some high earners from participating but there are alternatives for that as well that I find many aren’t aware of. There is so much info now on the Internet that it paralysis people from making any decision at all. Thank you for spreading a positive money mindset.
Thank you. I will speak to my financial advisor about this. I know that retirement is an option but getting the money is the issue. I will look into it.
Yes sorry I didn’t clarify I did mean there is a way to start consistent “withdrawals” prior to 59 1/2. But yes speak to your advisor they should look at your overall goals and hopefully give you a holistic view. Everyone should at least 5-10 years prior to their planned “stop working” date sit down with their financial planner. On another note, we need to rename the “retirement” word. Something sassier. So many people think it means set out to pasture that they say they will never retire (not because they don’t have the money). I say it’s ” work because I want to not because I have to date” lol Be blessed
I agree. That is why I like the F.I.R.E. (Financial Independence/Retire Early) movement. Retire doesn’t mean leaving work but working and doing something you actually like to do, or even exploring something different. I did look up retiring early (getting an early distribution) and saw info about the IRS Rule 55. I am going to talk to my financial advisor about this just so I can be knowledgeable. Thanks for commenting on my post because I would have NEVER known about that option!
Hi, i think that i saw you visited my web site so i came to “return the favor”.I am attempting to find things to enhance my site!I suppose its ok to use a few of your ideas!!
If you use my ideas I’d appreciate if you site where you got the ideas from. Honestly, I do a lot of research on different financial news pages and I have conversations with people who give me my ideas.
what is your site if you don’t mind me asking?