It’s a common conundrum. If I’m planning to retire early, why on earth would I choose to max out retirement accounts that I can’t touch until I’m months shy of being a sexagenarian?
When phrased that way, it doesn’t make a lot of sense to do so. Best to save in a brokerage account that can be accessed easily at any age, right?
The problem is that the question posed represents a misunderstanding of how retirement savings and retirement accounts work. Dr. Jim Dahle lays out an excellent argument for maxing out all tax-advantaged space, regardless of any desire to pursue an early retirement.
I’ve noticed a hesitancy among people aiming to reach financial independence and retire early (FIRE) at a young age (like 30s-50s) to use retirement accounts.
There seems to be this idea floating around that you need a big old taxable account to live off of up until the time you hit 59 1/2.
So some people aiming at FIRE actually purposely try to build a big taxable account at the expense of maxing out available retirement accounts. I think that is probably an error for most of them. Today I will explain why.