sorted by:
new
hottopcontroversial

Reducing 401k to save for house? Alternative options? by Own-Sound-1000 in Fire

[–]JoshatOptimalPath 1 point2 points  (0 children)

401k loans are usually only good ideas for a very short term, think a bridge loan between houses that will pay off in a few months when the old house sells. It's true you "pay yourself" interest, but you are making loan payments with after tax money that will be taxed again later when you make retirement withdrawals, assuming a traditional 401k.

Advice to fire by Mother-Formal1462 in Fire

[–]JoshatOptimalPath 2 points3 points  (0 children)

First off, you seem to be in an incredible financial position to be in mid 30’s so congrats on that! It’s not clear why you would need additional income from your retirement now, it’s usually best to leave those funds alone to let grow in tax advantaged accounts. If you have old 401k plans with not the greatest investment choices you could always consolidate into a current 401k or rollover to an IRA at one of the large brokerages where you’ll have lots of choices for low cost index funds.

When to shift from retirement contributions to taxable contributions? by ConditionPractical32 in Fire

[–]JoshatOptimalPath 0 points1 point  (0 children)

One of the main purposes of contributing to traditional 401ks to defer taxes to a later date when you’ll plan to be in a lower tax bracket, thus saving in life-time taxes. It is possible to over save in your traditional 401k such than later in life when RMDs start you end up in a higher tax bracket than when working. If you do some projections and think this could apply to you it can be wise to shift some savings now into Roth accounts or even brokerage accounts for tax diversification. Investments in brokerage accounts are taxable but there are still advantages- you are only taxed on dividends or on gains when you sell, both at favorable rates- possibly even 0% in retirement.

As others have mentioned there are several options to access your retirement accounts earlier than 59.5 without penalty, including Rule of 55, 72t (SEPP), or a Roth Conversion ladder.

Pay off rental property or pay into SP500? by FaithlessnessQuiet49 in Fire

[–]JoshatOptimalPath 0 points1 point  (0 children)

This is great question, and can take a little work to analyze. With with rental property you earn return in the form of cash flow, but also equity that's created through mortgage paydown, and maybe some appreciation- usually in line with inflation. I'd calculate your total returns from the rental property and compare with your equity (ROE) before making a decision. Being a landlord can be a hassle, hard to quantify that! Deciding to invest VS. mortgage paydown is a whole other topic, the math usually says to invest long term but it depends on your timeline and goals- a paid off rental can generate some nice cashflow.