Should I invest if I want to retire early?

Retiring early has become increasingly popular because of different movements promoting this lifestyle, such as the FIRE Movement (Financial Independence Retire Early). There are many choices you have to make to achieve your goal of retiring early, and one of them is to invest your money. Investing will allow your money to work for you and build wealth much faster than you could on your own. However, there are a few things to be aware of when investing for an early retirement. If you are investing through an employer’s 401k plan, you have to remember that you can’t do withdrawals without a penalty prior to age 55.

One strategy would be to leave the money inside your 401k until you’re 55 years old. You could also put money into a brokerage account which will be usable prior to the age of 55. If you end up retiring between 55 and 59 and a half, then you should leave your money inside your 401K plan instead of doing a rollover. Most 401k plans offer a provision that allows you to withdraw money for early retirement if you retire from that company at age 55, so you can do 401k withdrawals up until 59 and a half, and then after that, you could roll your money to an IRA. No matter which strategy you choose, you should always consider investing your money so that it can work for you.

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Casey Smith
President, Wiser Wealth Management

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