Everyone says to max out your 401k first, but I put my extra cash into a regular brokerage account instead.

I wanted to be able to touch the money before I'm 60 if I needed to, so I skipped the tax break. So far, it's let me pull out $8,000 for a down payment without any penalty. Does anyone else keep more money outside of retirement accounts for flexibility?

3 comments

3 Comments

claire_gibson2mo ago

Makes total sense. The early withdrawal penalties on retirement accounts are a real problem. I keep a good chunk in a regular savings account for emergencies, and a taxable brokerage for bigger goals like a future car or home repair fund. It's a balance between saving for later and having money you can actually use now. That liquidity has a real value that a lot of generic advice ignores.

parker1832mo ago

Yeah, the generic advice always seems to come from people who've never had a surprise $500 car repair. (My emergency fund is basically a "don't touch the retirement money" fund at this point.)

grace_campbell2mo ago

But @claire_gibson, the tax hit is the real killer, not just the penalty.