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Subject:  Re: Is IRA appropriate for early retirement? Date:  1/17/1998  12:36 PM
Author:  TMFPixy Number:  1344 of 88533

Greetings, BlueDevilFan, and welcome.

<<I am a 20 year old college student. I plan to retire well before age 59 1/2 and I would like to know if an IRA could have any place in my portfolio. The main question is "Is the benefit of having earnings accumulate tax-deferred greater than the cost of the 10% penalty for early withdrawal over say a 20 to 25 year period?". I already have some savings and investments, but I had never considered IRAs because I always planned on retiring early. If anyone has an answer for me I would appreciate it greatly. I am familiar with the other aspects of investing that Fools promote-index funds, Foolish Four, small cap stocks, and shorts, and their allocation within a portfolio, I seek only information about the appropriateness of IRAs or other tax deferred investment vehicles for my situation.>>

As Jwilson pointed out, it is definitely to your advantage to do so. The earlier you can get that money to work, the better for accumulating the sum you will need to retire in style. And you can, as Jvanscoy mentioned, avoid the early withdrawal penalties as well when the time comes to take that money for living expenses. Further, paying the penalty may also on occasion make sense. But first things first, and that's getting the money to work for you. Do so now, and I'll virtually guarantee you will never regret it. At your age and if it lasts, the Roth IRA seems a very appropriate vehicle for accumulation purposes.


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