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Subject:  Re: Is IRA appropriate for early retirement? Date:  1/17/1998  11:08 PM
Author:  shess Number:  1352 of 88786

bluedevilfan writes:
<<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.>>

I'll assume that "well before" means you want to retire when you're 45 or so. If you start _today_ and invest $2000/year into a Roth IRA, and get a _great_ return of %20 for the next 25 years, you'll end up with ... drum roll, please ... just over $1M, worth perhaps $500k in today's dollars. Sure, that's tax free, but it's no retirement.

Even if you get access to a 401(k) or other employer plan, you might get to put away $8k-$10k per year, resulting in perhaps $5M, on which you'll have to pay taxes, too, netting out to perhaps $2M in today's dollars.

You'll have to have substantially more than that invested outside your IRA. I think the best bet would be to use the IRA like an insurance policy. The longer you let the money compound, the more there will be. So plan to retire on non-IRA assets, but fully fund the IRA just in case.

And if you never need it, let your kids fight over it,

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