How to retire once u hit ur networth goal

Put all your risky bets (like TSLA or whatever) into a Roth 401k or IRA so you can trade them as needed without paying taxes on the gains. Then use index funds in a traditional brokerage to fund yourself from 40 until standard retirement age. Note: keep in mind this only works if your risky bets win. If they tank and your tax-advantaged accounts are empty at retirement age it will suck. However if you want to actively trade and minimize tax burden this is the best approach.

You can do an "all of the above" approach: * Invest in index funds in an employer-provided 401k, at least enough to get any available matching. You can keep the 401k even after you leave the company and just let it grow until age 59.5 when there are no early withdrawal penalties. * Invest in a wider range of possible investments in an IRA, also planning to keep it until the standard withdrawal age of 59.5. * Invest anything you might use before age 59.5 as well as any extra investments in a taxable brokerage account. People who are high earners and low spenders can max out the 401k and IRA and invest all excess cash in the brokerage account and potentially end up with more investments in the taxable account than the sum of everything else, giving lots of flexibility. If you have a high deductible medical plan with a HSA (Health Savings Plan) option, you can invest HSA funds for tax-deductible contributions, tax-free interest/dividends/gains, and tax-free withdrawals so long as withdrawn money is only used for eligible medical expenses or taken out after age 65. There are nice tax advantages to investing in accounts like a 401k/IRA/HSA so it's good to max those out until you're comfortable you'll have enough for your retirement life after age 59.5. RE when you get taxed for a 401k or IRA: * For a traditional 401k or IRA, contributions are tax-deductible, you pay no tax on gains, you do pay regular income tax on money you take out. (Only pay tax on the way out.) * For a Roth 401k or Roth IRAs, contributions are from after-tax money, and you pay no tax on gains or withdrawals. (Only pay tax on the way in.) There are no taxes on capital gains for trades you make in a 401k/IRA/HSA. Any money you want to spend much earlier can stay in the taxable brokerage account. For your second question, talk to a financial advisor who's worked with a lot of retirees to get specific advice on how to best plan and transition your investments as you get closer to retirement. I don't think it's a big issue to worry about this early if you're in your 20s, definitely a good conversation to have with a professional around 10 years away from planned retirement.

I am 40 now with a net worth of 7M, I don't feel I am ready to retire. My new number is 25M. The number you need to focus on is, what should be your monthly income such that you don't need to earn a living to pay bills. Don't forget the taxes, capital gains you need to pay etc. The reason I think 25M is, our lifetime expectancy is going to be another 40 to 50 years.. r u ready to cover that. I can't consider retiring from this career until I find my next career that I will enjoy doing for the rest of my life in a laid back manner that need not be as high paying.. just enough to pay grocery and utility bills. Btw, medical insurance is another major cost you need to plan on how you will pay for without a job. Its roughly $1200 a month with high deductible. So, work backwards from what you need if you retire to cover your monthly and yearly expenses.. and then plan out your finances that it generates income to cover for the same. Hope this helps. Before you all jump on me for 25M target, I need it to fund some initiatives I want to do for the larger good.

One of the options you can consider is moving out the minimum amount needed which when withdrawn at 5% will allow you to cover all your expenses comfortably, and moving it into a charitable remainder trust. This is a non taxable event on your capital gains as this withdrawal is going to be treated as a charity to the trust, so you can infact claim a tax deduction. This is irrevocable event, meaning the assets in your fund at the time of your death will be given away to charities of your choice. Now within the trust, you can choose to withdraw a minimum of 5% to maximum 50% of fund assets each year. You can reallocate and rebalance your fund portfolio at will, you will not be taxed on the fund gains. You will only be taxed on the amount actually withdrawn based on certain order. The fund management can be outsourced for a fee or you can do it yourself. You can keep the remainder of the amount not transferred to the trust in trading account, real estate wherever you wish basically. This setup gives helps you strike a balance between having steady flow of income for your lifetime which grow as the fund grows and an access to capital for any one time big ticket expenses.

There is literally zero reason to use an IRA if you want to retire well before 60. Because you can't take money out of the IRA before 60 without paying a penalty, and the penalty on top of paying tax on deduciont more than offsets the tax-free earnings.

Isn’t penalty on Roth only 10%? Or are you taxed on gains from withdrawing early too?