In the retirement planning world, the traditional IRA appears to be an effective future income planning tool. You save your wages at a tax discount but remain liable for that discount on amounts withdrawn in the future. The tax discount, as well as compounded interest, dividends, and earnings potential, has wooed financial practitioners for many years and remains a staple recommendation from your CPA, your banker, your money manager, and your financial advisor.
Why we do have societal reverence around the IRA? Why is it held so sancroscantly?
My experience as a financial advisor gave me a firsthand look at how people feel when talking about spending their IRA labor savings. Most people feel regretful and outright guilty about taking a dip in their future retirement funds; of course, my tonality and staccato would follow my clients’ emotions, providing comfort for something considered so silly and financially immature. I told myself that I would never do something like that.
That mental dialogue and verbal statement was frivolous on my part. I clearly have deviated from that path, abandoned my insurance license, and plan on spending my IRA over the next year while investing in my solar technical skills and personal enjoyment. My son’s child support payment as well as rent and what not demand funding, and I would rather not take a job for the sake of a job. A new job cannot deviate from my solar path.
As a personal and professional caveat, my Roth IRA will remain intact and serve as my tax-free retirement foundation.
Harvest those gains
How can we reframe spending your IRA labor savings and make the situation more practical and appealing emotionally? What could you really lose? You are essentially spending money that you will have to pay taxes on anyway, and most importantly, you have already worked for the money. The 10% penalty is a pain, but it is a cost of doing business. You can do better next time when making investment vehicle choices.
We can argue about tax trends, but clearly, the military-industrial complex has a stranglehold on our world economy. War demands taxes. You will probably see higher taxes in the future, and taking out the money now will take care of that concern. It is better to get hit with a 19% marginal tax rate than 77% in the future.
Think dispassionately about it. You are better off taking your gains, paying your taxes, and moving on. This strategy makes sense in today’s volatile economy with its robber barons at the helm. Heavy retirement allocation is not a consistent way to remain financially stable, especially if you have volatile cash flows. Entrepreneurs know this situation all too well and almost invariably have to resort to taking a dip here and there. Why not make a strategy about liquidating your IRA labor savings?
Take that money and reinvest in yourself and electricity capacity generation!
Reinvest your money in yourself
You should go back to school and/or learn a computer programming language. Most students are probably not getting into biomimicry engineering, behavioral finance, decentralized power, smart-grid operating language, or political psychology. Today’s labor market demands multi-dimensional, clever, and tenacious innovators who can master at least two disciplines. Your choices are limited when you focus exclusively on one discipline. It is also a risky proposition with economic changes.
Yes, I am taking my IRA labor savings and reinvesting my cash into a solar career change. To further my solar skills, ImagineSolar has taken me under its wings to learn the solar trade through an intensive work/study program. The program requires a financial commitment to trade time for tuition credit. My IRA labor savings are needed for that end.
This career change will be worth it considering that my finance/business skills will be meshed with the science/engineering behind solar energy. It sets the stage for me to master how to integrate decentralized, clean power systems into civil engineering projects/urban planning.
Build electricity capacity
Mastering the science behind financing and deploying decentralized solar and geothermal energy resources is a fantastic business. Decentralized electricity generation not only provides personal/commercial energy, but it sets the stage for earning profit from creating, storing, and selling your own power. Your own electricity is a truly powerful resource, almost as important as clean food and water.
Power generation over the Industrial Revolution has invariably led to inflation, destabilizing governments and your savings. You can decouple from the inflation gravy-train and immunize your principal investments against capricious exogenous forces. Your money is better off saved in land, energy, food, and water rather than in a tax time-bomb.
How do you build electricity capacity? Where do you put up the infrastructure? You take your IRA labor savings and buy commercial real estate. Your bank will gladly lend you money on quality commercial real estate, and then, you can wrap in the solar panel, the electricity storage, and the geothermal implements. Financing electricity capacity will benefit many generations of my family and other families. Why not use commercial real estate to meet that end?
Conclusion
Spending your IRA labor savings for a provident purpose is not idiotic or moronic. It is a reasonable choice among many that you can make to improve your life.
