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Question: Thinking long-term about retirement

Hi, I like to think long-term -- 30-40 years ahead. I'm 28, but looking at my retirement account and a number of retirement calculators, I could have enough retirement by the time I'm 55. BUT, I won't be able to tap into my retirement accounts penalty-free until about 10 years later. So, I'm wondering what a good strategy for bridging the gap might be.

Additional info about me: I'm single, don't own a home (nor am I really looking to), and my retirement is spread out between a Roth and Traditional 401(k), an HSA, and a normal ol' brokerage account invested in mutual funds. Thanks! Jason

Response:

I like that you're thinking long-term. You don't want get lost in the minutia of personal finance.

But I would go further. Step back every once in a while and ask yourself some big questions, such as, Where do you want to be in 5 years, 10 years, 40 years from now? Are you in the right career or is it time to explore another? What do you really want out of life? "Managing uncertainty is really about managing yourself," says Ross Levin, a certified financial planner and head of Accredited Investors Inc. "If you can discover what you want out of life -- the why -- then there are a number of ways to get there -- the how."

Saving is a critical part of the "how."

To your specific point, you'll be able to tap into your 401(k), IRA, and other so-called defined contribution retirement savings plan without penalty once you're 59 ½. You won't have to wait a decade after age 55, although odds are you'll still be working and contributing to your retirement plans at least through your early 60s (and probably later).

You mentioned you have a brokerage account. My recommendation for building the savings bridge you're wondering about is to fund an automatic savings program on your own that regularly takes money out of your banking account and puts it into a variety of taxable accounts. Some of the taxable savings could go into FDIC-insured savings accounts or federally insured credit unions. You could also add to your mutual funds on a regular basis.

At first you could consider this savings program as adding to your emergency savings, your financial margin of safety. But over the next 30 to 40 years the money will become an opportunity fund, bridging multiple transitions during your life -- including retirement. You're building the money foundation that gives you plenty of choice in your 30s as well as in your 60s.

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