When planning to retire early at 55 without incurring early withdrawal penalties from IRAs or 401(k)s, it's essential to have a suitable investment mix in a taxable brokerage account. While capital gains taxes can pose a challenge, they are manageable. Investments in tax-advantaged accounts are beneficial, but they come with drawbacks, such as penalties for early withdrawals. Careful planning and possibly seeking the counsel of a financial advisor can help optimize retirement strategies for tax efficiency and financial security.
Their primary investments in that account now are ETFs and mutual funds. And they're wondering if they should make changes. The answer? Maybe - but not necessarily for the reason they think.
There's a reason workers are commonly advised to save for retirement in an IRA or 401(k) plan. These accounts offer a world of tax benefits, like tax-free contributions and tax-deferred investment gains.
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