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.