No. of Recommendations: 3
This is a crude lifetime financial plan--modify it according to your priorities and needs, but it may serve as a starting point for discussion:

1. Fund a "mini emergency fund" of about a month of living expenses. Keep it someplace reasonably safe and reasonably liquid (typically a savings account at a credit union or bank).

2. Pay off high-interest debt. For example, 18% credit card debt will eat in one's earnings far faster than one can typically earn back from long-term investments. Carrying high-interest credit card debt is very detramental to one's net worth and thus very destructive to one's future plans. Generally, it is good to avoid debt except for what one can reasonably handle for education (which improves one's ability to earn income, which is one's most important financial asset) and for a mortgage that one can easily afford. (I don't want this to go into a big discussion about borrowing to start up a business. But for personal items, I think minimizing debt obligations is generally good--usually it is better and cheaper in the long run to save up for personal purchases than it is to borrow and pay interest--that interest is esentailly a I want it now "tax".)

3. Build up a fully-funded emergency fund. This is typically the equivalent of 3 to 6 months of living expenses. (My preference is 6 months.) This should be reasonably safe and reasonably liquid, but when it gets larger (4 to 6 months of living expenses), it may make sense to move part of it off to better returns in exchange for reduced liquidity or slightly higher risks (e.g., savings bonds, which are illiquid until 1 year after purchase; CDs, which have "substantial penalty for early withdrawal"; short-term bond funds, which have some volatility in what is called "interest rate risk").

4. I might suggest doing this at the same time as #3. Contribute to the employer's plan (401(k), 403(b), or the like) up to the amount matched by the employer. Contributing less than the matched amount is like telling your employer that you don't want all of your compensation. If there is no employer match, go to #5.

5. If you have more money to invest for retirement, contribute to a Roth IRA if you can. Even though the contributions to a Roth IRA are after-tax, if one follows the rules the withdrawals from a Roth IRA are potentially tax free. This is probably the only way you can get decent growth and also have it tax free. (Municiple bonds from one's state are also tax free, but generally pay a low interest rate.) Also, you can open a Roth IRA with just about any financial establishment so you can pick your investments and then pick the most appropriate custodian for that. For example, if you wish to invest in the Vanguard Total Stock Market Fund or the Vanguard Target Retirement 2045 Fund, once you have $1,000 to invest, you could open a Roth IRA at Vanguard and use that $1,000 to invest in one of these two funds.

6. If you have more money to invest for retirement, and if the investment choices in the employer plan are reasonable, the expenses are low, or if your occupation tends to attract lawsuits, contribute to the employer plan up to your legal limit. Even though withdrawals in retirement will be taxed at ordinary income tax rates, the ability to contribute to them before taxes give them a big advantage that personal (taxable) investments don't have.

7. If one still has money to invest for retirement, consider whether to invest in personal (taxable) accounts or pay off the lower interest debt (such as a mortgage or the 1.8% student loan--that 1.8% sounds really low!).

Even though steps 4 and 6 put money in accounts that one normally cannot access until one is 59.5 years old (or one can withdraw from the most recent employer's 401(k) or 403(b) if one has turned at least 55 years old before retiring), one can still make use of that money in early retirement by, after one has retired, roll the money over to a "Rollover IRA" and then, since the Rollover IRA follows the rules of a Traditional IRA (with the added advantage of being able to be rolled into a new employer's plan), one can make use of the rules of a Traditional IRA. One beneficial approach of a "Rollover IRA" for early retirement is to make use of SEPP (Substantially Equal Periodic Payments, one of the clauses of 72T) to make penalty-free withdrawals of funds for living on. SEPP must last the minimum of at least 5 years or until one is 59.5 years old, whichever is longer, the amount withdrawn depends on the balance of the IRA(s) one is using for this purpose and one's life expectancy. But when making use of SEPP, one pays just income taxes, not any penalties. So, by using SEPP, one can benefit from a 401(k) or 403(b) by being able to make pre-tax contributions while working, yet after rolling over to a Rollover IRA and setting up SEPP, one can withdraw funds before one is 59.5 without the 10% penalty.
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