Retirement Options

Hi everyone!

My husband and I have paid off all of our debt (except for our mortgage) and saved an emergency fund covering 4 months worth of expenses. We’re both contributing 10% each to our retirement accounts and believe it should be closer to 15% each. Is that correct? If it is, should we contribute to a Fidelity target date fund or the Fidelity 500 Index Fund? I think the main difference is that we can withdraw from the index fund at any time but not the target date fund until we’re 59.5.

The fund itself doesn’t determine when you can withdraw, it’s the account through which you are investing. You can pick a target date fund in a regular taxable brokerage account and there are no age-related withdrawal restrictions. If you are buying either of those funds through a retirement / tax advantaged account, then regardless of the fund you pick, you’re restricted by tax laws for when you can withdraw.

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Hey Anna!

@Getbacktocenter is right! The fund you choose doesn’t impact when you can withdraw the money. The type of account it’s in does. If these investments are in a regular brokerage account, you can take the money out whenever you want (even if you’ve invested in a target date fund). If the investments are in an IRA or 401k, you generally need to wait until you’re 59.5 (even if you’ve invested in an S&P 500 index fund).

That said, the more you invest the better! Try plugging your numbers into the retirement investment growth calculator to see if you’re on pace:

And regarding your fund choice, check out this video: