You might not need a retirement account

Retirement accounts push you down a certain road that you might not need to travel at all. Let me explain.

If have any interest in early retirement, or retirement at all, then you’ve probably gone through the song and dance of the 401(k), the IRA, and the Roth IRA. If your company will match the 401(k) donation, then it certainly makes sense to double your money. But due to a essentially unknown loophole in the US Tax Code, the catch-ups and finangling to avoid taxes might not be the best use of your money. I’ll explain why.

FIRE Away

Financially Independent, Retire Early is an inspiring goal. Earn well, then move to a low cost of living state and live your life — or at least be able to if you wanted to. The magical number for the FIREing is 4% annual withdrawl. That means if you want to live on $40,000 in retirement, you need a million dollar fund. Yet 401ks, IRAs, and other retirement accounts lock your money up to the age of 60 — or later! Try to take the money out early and face still penalties.

Or just pay the taxes once and be done.

Did you know that the first $41,675 of long-term capital gains income for a single householder, or $83,375 for a married couple, is not taxed at all?

Here’s the info, straight from the IRS: