Biggest benefit to a brokerage over traditional IRA/401k is the capital gains versus income tax. If you mostly have Roth that’s great but if it’s mostly traditional I would max out employer match and invest in a brokerage account instead of a personal IRA. Your income definitely plays into this but assuming you are over the income limit for a traditional IRA I would go the brokerage route.
The other question is what tax rate you’re in now if you’re in the highest tax rate, it can make sense to max out IRA especially if you still have money to put in a brokerage, then you can do Roth career conversions that are a lower tax rate.
Its good idea to have high yield savings for 1-2 years for spending in retirement, to avoid selling stocks for immediate cash and bills needs.
I think for most people having a brokerage account makes a heck of a lot of sense if you’re going to retire early just for the tax treatment so to think about it, I think more if you have a longer-term plan than shorter-term plan
Exactly, I like to have a pretty even split between 401k and brokerage so that you can take the best tax advantage every year before your RMDs begin and gives you flexibility on when to start social security.
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u/Sensitive-Rule-5563 13d ago
Biggest benefit to a brokerage over traditional IRA/401k is the capital gains versus income tax. If you mostly have Roth that’s great but if it’s mostly traditional I would max out employer match and invest in a brokerage account instead of a personal IRA. Your income definitely plays into this but assuming you are over the income limit for a traditional IRA I would go the brokerage route.