Respectfully, that's simply incorrect. 72(t) distributions can begin at any time (401ks/IRAs) and avoid early withdrawal penalties. Everyone's situation is different, and due dilligence is essential.

But the conditions don't make it viable for most people.

I've heard many times that few funds beat the S&P 500 or The Russelln2000 over time. Schwab offers no load, no fee funds in both.

Good for you to get started early. Best bit of advice I can give you - Is every time you get a raise - up your contribution (sort of like giving a raise to yourself) If it's not there - you won't miss it.

And live within your means.

Keith, I just googled that 72T that you mentioned. My plan admins must have "forgot" to mention that one. That is a powerful tool for an early retirement option. Thanks for info, the knowledge base on this forum is amazing.

I'm not saying it will vaporize. It's just that with a 401k you are betting against yourself. ...your future self. You're betting that your cash flow will be so pathetic that, when you "retire" (if you make it that far) that you will be taxed (deferred) at something close to a poverty rate. (talk about gloom and doom...)

...and I'm saying that the value of the dollar generally inflates, and taxes go up... so don't count on a 401k "investment" being a big pay out. ... :)

edit: When I say "you" I'm thinking of a young guy (like the OP) Who is starting out in building his career and family and isn't flush with excess Money to "invest" into others.

There is a lot of good advice here. I will add my 2 cents as well.

First, be sure to research the fees for the different index funds. If you are trying to choose between 2 then go with the one with the lowest fees.
Fees can really bring down the affect of compound interest.

Also, don't over diversify. Some people put money into multiple types of mutual funds that are all investing in the same thing. Just pick one and stick with it. Only swap out if you feel an impending crash or if the fees go up.

You will have way more choices in investment options with IRA's. I would tell you to put only enough into the 401k to get the company match. After that, put your money into the IRA. So if you plan on putting in 5K for the year and the company matches 3K per year, then only put 3K in the 401K and the other 2K in the IRA.

Live conservatively and don't be jealous of your friend's toys. You can't believe how much money I wasted in my 20s. I have spent almost my entire 30s digging out of the hole.

If you want to learn more about basic financial health, Jim Cramer's mad money for life is a book that helped me. It's an easy read and gets you excited about saving money for the future. It covers a ton of topics like mutual funds, ETFs, bonds, etc..

If you want to really scare yourself financially you can always watch the Suze Orman show on CNBC. She is ultra conservative financially and will convince you that you can't afford a morning coffee. It does give you a good perspective on other people's financial health as well.

Thank you everyone. Seriously. You guys are getting me ready for my future.

Interesting factoid...the retirement calculator asks your age. For some reason you have to enter a number between 25- 60. I guess they don't think anyone will start planning at 23?

:rolleyes:

likely because they expect a 23 year old to be thinking about paying off student loans and such.

IMO it's ridiculous for any 20 -something, who is carrying personal debt, to be giving Money for others to hold until retirement. The only caveat is when someone else is matching... but still you would likely be better off taking a slightly higher salary.

Invest in yourself first!

This is generally not an option though, G. Believe me, I would have taken that option when I got out of college witl all my credit card and student loan debt.

So at the vary least everyone should get the company match..max it out. And I agree with your caution about the 401K. I like to enjoy my money while I can, so I have targeted what I think is a goal that will just keep me comfortable at retirement...and until I get there I'll enjoy my money and maybe pickup some asset that's likely to retain some value over time.

The math I do is to balance interest I get and interest I have to pay. So a high rate of return doesn't mean crap if I have high debt and the interest I HAVE to pay offsets any gain from interest.

This thankfully isn't a problem for me. I have neither student loans, nor credit card debt. I have 18 months left on my car note which is miniscule because I decided to live well below my means. I am starting to realize that being slightly smart about planning my future now will pay off with huge dividends down the road.

This was not an option for me, unfortunately :( I had to put myself through school, and I used nearly every dollar to pay tuition and rent. Sometimes I had to use my credit card to buy groceries. When the Burger King down the street was having a buy one get one free Whopper deal...I ate well for two meals.

I actually did not start putting money into a 401K until I was 28 yrs old despite knowing I should. I really couldn't because I had to pay back the creditors. To rid myself of interest was better at the time. It was simple and unfortunate...if I was more net negative over time while paying less to my creditors because I was paying into a 401k...then a 401K was not smart. Thus my comment about balancing the interest. So you are a lucky young man, Tom. Take advantage of your good fortune...

What Tom said, the only debt I have at 22 is $9k on a car loan that has a low interest rate. I think it is better to put the money into savings and continue to pay a small amount of interest. I am likely to get a higher long term return than my car rate, plus it's easier from a cash flow perspective.

I put 8% of my income into my 401k and try to save at least a couple hundred dollars every month in more short term savings. When I graduate my training program, the goal us to keep my spending patterns roughly the same for a couple of years and double down on the saving and investment.

I started over at that age, 'cause I did something STUPID and paid off a car loan (my last one ever) with my first 401k as I changed jobs. I know one thing for sure, this board isn't typical, and Tom and Garrett are light years ahead of many of us when we were that age :). You both have already figured out what some never do imo...congrats!

+1 Though, I expect that gives guys like us a bit tighter strategy, when it comes to money management.

Others, often fall into the dogmatic "everybody knows" trap/game. You know, stuff like; "Real-estate - buy as much as the bank will lend to you, because it always goes up in value. ...or "the stockmarket; if you are in it for a long term, the lows wash away, and it always goes up. ..."

I think virtually everyone posting on this thread has been advocating real experiences with slightly different twists. Live within your means, debt management, slow & steady, etc. The fact that we even have a strategy puts us pretty far out there on the bell curve :)

Ah yes, strategery. . . http://forums.pelicanparts.com/off-topic-discussions/586678-so-51k-my-money-went-missing.html

Notice I didn't specify which side of the bell curve :)? That is also a lesson on diversification. On the upside, HD's "plan A" is still working splendidly...hope that works out too!

~~ 5%

call the 800 # for Vanguard and ask for their series of pamphlets on investing

also ask if they can xfer your actt. in from Merr-will-Lynchya... (they can)