Should I keep maxing my 401k if I want to retire before 63?

General
1

I’m 30 and have been maxing out my 401k contributions for the past 3 years. Across all my 401ks (current and former employers), I’ve got about $100k saved. Seeing that six-figure mark felt great and made me think more seriously about retirement.

Using an investment calculator, I’m on track to hit $1 million in about 18 years if I keep contributing around $2k a month with a modest 6% return. That’s exciting, but it’s not enough for me to retire early since I’d still need to follow the 4% rule.

Here’s my dilemma: If I can’t use this money without penalties until I’m 59½ (or 63, depending on the rules), should I redirect some of my 401k contributions to a personal investment account instead? My personal account currently has $70k invested in VOO and some tech stocks like Microsoft and Nvidia.

I’d love to hear thoughts on whether it’s smarter to keep maxing my 401k or start building up more accessible investments. Ideally, I want to retire early and work on things I actually enjoy.

2

The tax advantages of a 401k are tough to beat if the money is for retirement. Having a personal account for liquidity is good, but if the goal is long-term growth, stick to tax-advantaged accounts like a 401k or Roth IRA.

3

@Kellan
Isn’t there a limit to how much you can put in a 401k? Or are there ways to contribute more?

4

Case said:
@Kellan
Isn’t there a limit to how much you can put in a 401k? Or are there ways to contribute more?

The standard limit is around $23,500 (2025), but some plans allow after-tax contributions up to a total limit of $70k. Check with your employer.

5

@Kellan
Just a heads-up: Roth contributions are after-tax, not tax-deferred.

6

Corey said:
@Kellan
Just a heads-up: Roth contributions are after-tax, not tax-deferred.

Good point. I misspoke earlier. Thanks for clarifying.

7

You can withdraw Roth IRA contributions anytime without penalties. It’s just the earnings that are restricted until you’re 59½.

8

Hero said:
You can withdraw Roth IRA contributions anytime without penalties. It’s just the earnings that are restricted until you’re 59½.

Exactly. Contributions are always accessible without penalties or taxes.

9

@Zara
Isn’t there a 5-year rule for withdrawing contributions?

10

Wylie said:
@Zara
Isn’t there a 5-year rule for withdrawing contributions?

Nope. The 5-year rule only applies to earnings, not contributions.

11

Linden said:

Wylie said:
@Zara
Isn’t there a 5-year rule for withdrawing contributions?

Nope. The 5-year rule only applies to earnings, not contributions.

Thanks for clarifying. I used to think that rule applied to everything in the account.

12

You can withdraw from your 401k penalty-free starting at 59½, not 63. Where did 63 come from?

13

Aubrey said:
You can withdraw from your 401k penalty-free starting at 59½, not 63. Where did 63 come from?

Phew, glad someone pointed this out. I had a brief moment of panic reading 63.

14

If your employer offers a match, contribute enough to get the full match first. Then max out a Roth IRA for tax-free growth. After that, you can decide whether to put extra into your 401k or a personal investment account.

15

@Raj
If I’m already contributing more than my employer match, should I scale back 401k contributions to max out my Roth IRA instead?

16

Bailey said:
@Raj
If I’m already contributing more than my employer match, should I scale back 401k contributions to max out my Roth IRA instead?

A common approach is: max the company match, then max out your Roth IRA, and put anything left into your 401k.

17

Focus on saving enough for traditional retirement first. Once you’re on track to cover yourself starting at 60, you can think about shifting money to accounts for early retirement.

18

Look into the ‘Rule of 55.’ It lets you withdraw from your 401k penalty-free starting at age 55, but only from the 401k at your last employer. Combine that with a Roth IRA and personal investments, and you could retire before 59½.

19

The tax benefits of a 401k are huge. There are strategies to access the funds early, like Roth conversions. Check out the FIRE (Financial Independence) forums for more details on how to plan for early retirement while maximizing tax advantages.

20

A Roth IRA can be a great bridge for early retirement. You can withdraw your contributions at any time without penalties, and it grows tax-free. This makes it a good complement to a 401k.