Following Europe’s 2016 General Data Protection Regulation (GDPR), California passed its own California Consumer Privacy Act (CCPA) in 2020. I won’t pretend to understand the intricacies of the law or the differences between the two, but from what I understand this gives you the right to know exactly what data of yours do businesses use, and request that this information is to not be sold or to be deleted.
As a California resident, I decided to dedicate a long weekend to exercising my privacy rights. The long weekend turned into a week worth of back and forth with a dozen-or-so companies, and me having a much better idea of what information about me is out there.
Turned out many large websites provide privacy dashboards where you’re able to review and see information collected or inferred about you. But most of this data is hidden behind a formal request process which takes a few days to a week.
First, I decided to stroll through Google’s privacy settings. There are two ways forward: privacy dashboard, or full-on Google Takeout. Google Takeout allows you to download an archive of everything Google has on you, which took a few days to process, and is near impossible to go through while keeping your sanity. So I decided to play with the privacy dashboard instead.
Google Maps has location history of most places I’ve visited for the past ten or so years (creepy, but I found it useful on more than one occasion), and YouTube and Search history stores thousands of searches. I already had Assistant history disabled, since storing audio recordings is apparently where I draw the line when it comes to privacy. Targeted ad profile was an interesting thing to look at, accurately summing up my lifestyle in 50 words or less. I ended up disabling targeted ads from Google (and all other services as I went about on my privacy crusade).
Google had some of the finest privacy controls compared to other services, with actionable privacy-leaning suggestions. Google’s not known for its services playing well together, but privacy is where Google feels closer to Apple experience - everything is in a single place, surfaced in the same format, easy to control, and plays well together. Given the amount of transparency and fine grained control, I feel pretty good staying in the Google ecosystem.
Next I looked at LinkedIn. Outside of the expected things – emails, phone numbers, messages, invitations, and a history of just about everything I’ve ever clicked on, a file labeled “inferences” stood out. Whether LinkedIn thinks you’re open to job seeking opportunities, or what stage of career you are in, or if you travel for businesses, or if you’re a recruiter or maybe a senior leader in your company.
Since LinkedIn is a professional network, all information I share is well curated and is meant as public by default – and I found LinkedIn privacy settings in line with my expectations.
As an avid gamer, I went through Steam, Good Old Games, Ubisoft, Epic Games, and Origin privacy details. Unsurprisingly, the services tracked every time I launched every game, shopping preferences, and so on. Thankfully the data seemed confined to the world of gaming – which made this level of being creepy somewhat okay in my book.
I also looked at random websites I use somewhat frequently – Reddit, StackOverflow, PayPal, Venmo, AirBnB, and some others – not too many surprises there, although I did end up tightening privacy settings and opting out of personal data sharing and ad tracking for every service.
Last year I requested deletion of all my data on Mint, Personal Capital, and YNAB (You Need a Budget), and to be honest I’m a little relived that I didn’t have to look at the data these companies had on me.
Amazon data sharing turned out to be the scariest finding. Until now I didn’t really self-identify as a heavy Amazon user, but that turned out to be a lie: Prime shopping, Kindle, Audible, Prime Video.
The amount of data Amazon kept on me was overwhelming: Kindle and Audible track every time I read, play, or pause books, the Amazon website keeps full track of browsing habits, and Prime Video has detailed watch times and history. Most of this data ties back into real world – including nearly every address I ever lived at or phone numbers I had.
Even scarier, despite never using Alexa, I found numerous recordings of my voice from close to a decade ago – me checking status of the packages, but a few of me just breathing and walking around. I found no way of deleting these, as they didn’t show up in any privacy settings (including me installing an Alexa app just to get into privacy settings).
All of this gave me pause. It feels like the privacy controls are either lacking, hidden, or spread out thin across Amazon’s various apps. And I’ve only briefly scanned through the data Amazon had on me.
That’s where I had to take a break.
I have accounts with hundreds of services, and I have no idea how my personal data is used, and what it’s joined with. As I’m go on about my daily life, I’ll start tightening privacy controls, and maybe deleting services and their data where possible.
It’s just too creepy for my taste.
As I’m starting to write more about early retirement, I think more and more about financial planners and advisors I’ve talked to along the way. The first financial planner I ever talked to (who’s been now fired from a role of my financial advisor and promoted into a position of friendship) reminded me about the beginning of the journey after reading one of the FIRE articles I’ve posted earlier this month.
I’ve talked to half a dozen financial planners over the past 5-or-so years. Some of those conversations have been very influential, and some have been more aggravating than anything else – but it was a net positive experience for me.
The aforementioned financial advisor I’ve had the pleasure to talk to was a colleague’s spouse. I’ve voiced my interest in early retirement, and we decided to sit down and run through a financial overview.
I’ve learned a lot from this meeting, and the advisor helped me frame my knowledge, and fill in the gaps for everything I’ve learned on the Internets. The biggest value came from leveraging tax-advantaged accounts and employment benefits: maximizing 401(k), IRA, and HSA contributions, leveraging IRA backdoor and 401(k) megabackdoor (I just talked about these in detail in “Accessing retirement funds early”). We discussed fund selections, risk profiles, and even touched on housing. It was great to have an opportunity to have someone who knows what they’re talking about answer all the questions that built up over the years.
The conversation had profound impact on my initial portfolio and investment strategy, and set pace for early retirement planning. With the confidence of having my plan and assumptions validated, I went on with my investments (employing the “slow, boring and steady” strategy, if you’re interested).
After some time said colleague and his spouse became our family friends: and I don’t much care for doing business with friends.
After that experience, I struggled to find the person I would work with for a prolonged amount of time.
At some point I thought I found “my guy”: a financial planner who was familiar with early retirement, and was eager to do additional research for just about any topic I could ask. Unfortunately for me it didn’t take long for “my guy” to soar through corporate ranks and get promoted past working with individual clients.
This is where the cracks started to show. For many financial planners, early retirement refers to age 55. And that makes sense – retirement in your 30s is such a niche topic! Most financial planning tools don’t account for this. Things like tapping into 401(k) or IRA balances before age 59 ½ is not something supported by the rigid financial projection tooling.
Your typical financial planner will not be intimately familiar with the intricacies of early retirement – or any other niche topics for that matter. And that’s okay. Because financial professionals still know their shit – and it’s much easier for them to make professional judgement about things your smart ass found online.
The best financial planners I talked to were willing to listen and put in work outside of our calls. Those folks would understand my concerns, supplement their answers with research, and come back with educated opinions.
A model that works for me is providing my questions and concerns in advance of the call, giving the advisor time to research niche and domain specific questions.
Financial planners worked for me especially well for two purposes:
- Confirm that my understanding of something is correct.
- Tell me about things I don’t know or haven’t thought about.
This is where a financial planner pointed out that I misunderstood 401(k) contribution limits, or didn’t consider implications of varied cost of health insurance in retirement. This is the person I bombarded with an hour worth of questions about my auto insurance or the need for umbrella policy.
One time fee advisors worked best for me. I know some folks who moved assets under management for a certain percentage of those assets in fees, and are now trying to get out. This worked okay for them early on, but ended up not being what they want as they became more financially savvy. And it turned out to be oh-so-expensive in the long run.
And there are many things I had to watch out for along the road. Some advisors I’ve talked to seem to have no idea what they’re talking about, and just sound misguided. And it’s not solely my opinion - sometimes I would write down something a person would say, ask for independent opinion, and get back “What drugs are they on? I would like some of that!”
There’s also the question of their interest.
Some financial advisors might be inclined to sell things like lucrative whole term life insurance, and while in certain cases it’s appropriate, it might not always work for all individuals. But it sure as hell pays well for those advisors, so it’s hard to fault them for peddling the insurance.
The United States has a fiduciary system that’s supposedly requires a planner to work in your best interest (I personally learned about it from this Last Week Tonight show episode).
If you’ve done a lot of your own research (and especially if you haven’t) – it certainly wouldn’t hurt to talk to professional and review your decisions. Someone who has an idea of what they’re doing can go a long way in making sure you’re not heading down the wrong path – and if you are – you’re doing it with full awareness of the trade offs you’re making. Just be mindful of pitfalls when doing so.
When writing about snippets at Google earlier this week, I omitted a fairly important bit: how lists and journaling help me create distance between work and life. This became especially relevant in the pandemic, as I had to work with my therapist on being able to mentally disconnect.
I wrote about my strained relationship with ToDo lists before: all the way back in 2014. Back then I focused on moving away from a monolithic ToDo list, and focusing on just a few major things I’d like to accomplish each day. I continued to do this, but with some changes to my philosophy.
I’m back to keeping a ToDo list, but it’s a bit more complex than a single list I used to keep. I split things I care about by days, weeks, and months, and I review these lists regularly.
Last year I learned about bullet journaling, often shortened to “BuJo”. Akin to artisan coffee and avocado toast, this hipster friendly and highly marketable approach has a solid foundation. At its core bullet journaling consists of two parts. First is a consistent and simple notation for tasks, notes, and events: some simple guidelines on how to document what happened, what will happen, and what you need to remember. Second part is a rule set on organizing these lists: daily and monthly notes, custom logs, and so on.
I rigorously keep daily notes about work, meeting annotations, records of important thoughts and ideas, and things I need to do (or have already done). This helps me leave work at work – or more precisely leave work in a journal. Once it’s closed - I’m done for the day. Everything I need to think about is written down, and there’s no need for my mind to wonder back.
Some weeks I omit note taking, and the contrast in my well-being is jarring. My mind wonders back to the events of the week, and I even have trouble sleeping some days. And no one wants to dream about work – I’m sure as hell not paid enough for that.
Another technique I picked up from the bullet journal keeps me from getting overwhelmed and keeping focus. BuJo advocates for regular migration of ToDo items – meaning that you should be crossing out and rewriting the same thing over and over again, day by day, week by week. At some point it becomes either to either do something about those ToDos, or choose not to do them altogether. Either way, it’s a huge weight off my shoulders.
And this is where the aforementioned snippets come in. At the end of the week, all I have to do is go through the weekly set of notes, and transcribe noteworthy bullet points. That’s the time I take to look back at my week, migrate tasks I choose to revisit at a later date, or cross off tasks I choose not to do.
I’ve learned a lot of cool things during my tenure at Google.
One of those things are snippets. Google (and from what I hear other Silicon Valley giants as well) utilizes a system of snippets: a transparent and widely accessible set of weekly notes. It’s not mandatory, and some groups use it more often then others. Sounds ordinary, but I think it’s a lot more interesting then that.
Communication and visibility is one of the major challenges in any paid creative work, but it’s especially important in software engineering. Engineers often settle on tasks they know nothing about: tasks are hard to measure and estimate. This makes it even harder to communicate progress broadly.
There are ways around this communication barrier – regular standups or periodic reviews come to mind. But there’s a better (although not necessarily exclusive), more asynchronous way to communicate and increase visibility. Enter snippets - a condensed list of what happened with you and your colleagues last week, delivered straight to your inbox.
Every Friday, an email notification reminds you to fill in weekly snippets. These snippets might look something like this:
- Project X
- Authored a design doc (link), sent for a review
- Discussed roadmap with stakeholders A and B (notes)
- Debugged issue Z, to no avail (link)
- Project Y
- Cleared backlog for the past 6 months
- Attended a summit about G
- Had 1:1s with C, D, E, and F
On Monday, an email goes out compiling our team’s snippets in a single digest. Skimming through snippets covers any communication gaps from the past week, and raises visibility on what everyone is working on.
This system has many benefits:
- Transparency: you know what everyone around you (including higher ups) is up to.
- You actually remember what you’ve done a month from now.
- All the important documents, events, and notes are linked from snippets. Snippets are are time bound, which makes these documents easy to find.
- Teammates and managers can always check snippets to get an idea of progress on certain efforts.
- You manager (who’s hopefully your biggest ally when it comes to career development) has a great idea of what you’re up to.
- It’s easy to find artifacts and proof during performance reviews.
- Higher visibility of glue work (all the little things you do to keep the place running).
This doesn’t have to be a particularly complex system. A running doc with notes could suffice, although email notifications remove a lot of the overhead needed. Even if the organization doesn’t follow the model, I find it worthwhile to keep snippets, and to share them with my manager and team.
As I’m reentering a society after the pandemic, I had the pleasure to chat with a family friend about early retirement strategies. One of the many topics that popped up was about accessing age-locked retirement funds - namely 401(k)s and IRAs. Conventional wisdom is that these account stay locked until you hit a certain age, but funds from these accounts are accessible as long as you’re ready to jump through some hoops.
I put together this post to test my understanding of the subject, so please let me know if there’s something I misunderstand. I used the IRS and the United States Code websites as the sources of truth, and I link to each throughout this piece. The links are likely to get out of date within a few months to a year though, so don’t hold your breath for those.
This article is for retirement accounts in the United States only.
There are 5 tax-advantaged retirement vessels that I’m somewhat familiar with:
- Traditional 401(k)
- Roth 401(k)
- Traditional IRA
- Roth IRA
These are not the only tax-advantaged accounts out there for different employment situations, but I think these are fairly common. Here’s a quick reference for each with some stats as of June 2021:
|401(k)||Roth 401(k)||IRA||Roth IRA||HSA|
|Allows for employer match?||Yes||Yes||No||No||Yes|
|Tax-advantaged contrib. limit||$19,500 + match||$19,500 + match||$6,000||$6,000||$3,600|
|Total contrib. limit||$58,000||$58,000||$6,000||$6,000||$3,600|
|Contrib. increase at age 50+||$6,500||$6,500||$1,000||$1,000||$1,000 (55+)|
|Withdrawal timeline||59 ½||59 ½||59 ½||59 ½ or 5 years||Qualified/65|
|Early withdrawal penalty||10%||10%||10%||10%||20%|
I dig into each a little bit more below.
Traditional and Roth 401(k)
401(k) is an employer sponsored plan: it allows you to invest in a choice of funds selected by your employer. 401(k) often comes with an employer match, which allows the employer to contribute additional amount on top of the tax-advantaged contribution limit. At age 50, you can contribute additional amount in “catch-up contributions”.
There are two limits for 401(k) plans: the tax-advantaged contribution limit (at $19,500/year in 2021, not including employer match), and the total contribution limit (at $58,000) (IRS website). You don’t get any tax benefits from contributing to your total contribution limit, but it’s primarily used for “401(k) megabackdoor” - to funnel money into a tax-advantaged Roth IRA. The limits are shared across Traditional and Roth 401(k).
From what I understand, Roth 401(k) also requires the employer match to be contributed to a Traditional 401(k) account.
Traditional 401(k) is tax-deferred, meaning you don’t pay taxes on the amount contributed, but you pay taxes on withdrawal – this includes paying taxes on the principal (the investment income). In contrast, Roth 401(k) is tax-exempt. You pay your taxes in advance, and investment income or withdrawals are not taxed.
Early withdrawal penalty of 10% applies if you attempt the funds before age 59 ½, but keep on reading to learn how to get around that. You must begin withdrawing from your 401(k) by age 70.
Traditional and Roth IRA
IRA is an individual plan which allows for tax-advantaged investments. Direct contribution limit is at $6,000, however rollovers are not capped. Meaning the above mentioned 401 megabackdoor funds don’t follow the limit. At age 50, you can contribute additional $1,000 a year. The limits are shared across Traditional and Roth IRAs.
There’s technically an income limit on Roth IRA contributions (MAGI of $140,000 single or $208,000 married), but Traditional IRA contributions can be rolled over into Roth IRA (IRS.gov), effectively nullifying the limit. This is referred to as “IRA backdoor”.
Just like with 401(k), Traditional IRA is tax-deferred: you get a tax refund for contributing to it, but you’ll have to pay back those taxes on withdrawal. Roth IRA front loads the taxes, making earnings and withdrawals tax free.
Traditional IRA can be accessed at age 59 ½. Roth IRA can be accessed either immediately upon reaching age 59 ½, or after holding IRA account for 5 years. There’s a 10% withdrawal penalty otherwise, and you must begin withdrawing Traditional IRA contributions by age 72 (Roth IRA doesn’t have the mandatory withdrawal period).
Health Savings Account is another tax-advantaged investment, but it’s not tied to the employer (however employers might choose to offer an HSA plan). HSA contribution limit is at $3,600 for 2021, which includes employer match if employer offers any. This can be increased by $1,000 if you’re over the age of 55.
HSA is effectively tax-free, meaning that you don’t pay when you contribute, nor do you pay when you withdraw (but there are caveats). HSA can be withdrawn to pay for qualified medical expenses without a penalty. Reimbursing for expenses does not have an expiration date, as long as the expense was incurred after your HSA was established. You can also withdraw HSA without qualified reasons once you hit the age 65 (which is higher than 59 ½ used for 401(k) and IRA).
Now that the basics are out of the way, let’s discuss early withdrawals from each of these accounts.
Traditional and Roth IRA
Let’s look into IRAs first, since the most common way to access 401(k) funds early leverages IRA peculiarities.
I’ve also heard the 5-year rule referred to as a “Roth conversion ladder”.
The most obvious candidate for early access is Roth IRA. Roth IRA contributions (money you put in), can be accessed at any time without a penalty or paying additional taxes. Roth IRA distributions (aka the principle, or the money you’ve earned) can be accessed using what’s referred to as a “5-year rule”.
There are confusingly three 5-year rules when it comes to IRAs, and even more confusingly we care about two of them (the third rule deals with beneficiaries).
The first 5-year rule lets us access Roth IRA distributions within 5 years of owning the Roth IRA account. Simply enough, if you’ve had Roth IRA account for more than 5 years, you can access both the money you put in, and the money you’ve earned.
The second 5-year rule covers rollovers. Rollovers from Traditional IRA or Roth 401(k) need to marinate for 5 years (per transaction) before being accessible. So if you converted between your Traditional IRA and Roth IRA twice – in 2021 and 2022 – you’ll be able to access the money in 2026 and 2027 respectively.
This means that Roth IRA can be accessed if you hold the account for at least 5 years, and Traditional IRA can be converted to Roth IRA (a taxable event) and accessed penalty-free after 5 years.
For example, if you opened a Roth IRA account in 2015, and it’s now 2021 – you can access all the funds at any time without paying taxes.
In a more complex example, you’d convert the Traditional IRA to Roth IRA, and access the resulting money after 5 years:
- Convert a certain amount from Traditional IRA to Roth IRA
- Pay taxes on the transaction
- Wait 5 years (for each transaction)
- Withdraw transaction amount + earnings
This works out similarly for Roth 401(k) to Roth IRA conversion (but with less steps and without taxes):
- Convert any amount from Roth 401(k)
- Wait 5 years
- Withdraw transaction amount + earnings
72(t) SEPP (Substantially Equal Periodic Payments) can be used to sign up for a payment plan from your Traditional IRA (technically you’re able to use SEPP for your Roth IRA as well, but this will incur double taxes). This is quite a commitment, and you’ll be receiving periodic payments from your IRA until you hit the age 59 ½ (or for 5 years, whichever is longest).
For a Traditional IRA example, you can sign up for SEPP to receive $5,000 annually. This means that each year (until you turn 59 ½ or 5 years passes – whichever is longest) you will pay taxes on those $5,000, and withdraw the difference.
Additionally, IRA can be used to pay for large medical expenses (within the same year), high education expenses, home-related expenses ($10,000 lifetime limit), and a few more niche cases.
10% penalty sounds large, but it’s really not a terrible choice if the other options don’t work (although I don’t see why they wouldn’t). Given the tax-advantage growth that these assets have been enjoying, 10% penalty is not a steep price to pay. Although understandably loss aversion kicks in, and either a 5-year rule or the 72(t) SEPP sound preferable to paying the penalty.
In case with the Traditional IRA, the penalty would have to be paid in addition to paying taxes on withdrawn amount. Roth IRA only imposes a penalty if you didn’t wait for 5 years since the account creation or the rollover transaction.
Traditional and Roth 401(k)
401(k) can be accessed early (before the required 59 ½ age) in multiple ways. Both the 5-year rule (aka the Roth conversion ladder) and the 72(t) SEPP can be used to access 401(k) funds.
Roth conversion ladder leverages the ability to rollover Traditional 401(k) to Traditional IRA, and subsequently convert Traditional IRA to Roth IRA (a taxable event). Within the 5 years of that second conversion, you should be able to access the money.
For example, when getting ready for retirement, you may convert all your Traditional 401(k) balance to Traditional IRA. Then each year, you could do the following (this may look familiar from the above):
- Convert $5,000 from Traditional IRA to Roth IRA
- Pay taxes on the transaction ($5,000)
- Wait 5 years (for each transaction)
- Withdraw transaction amount ($5,000)
This works with Roth 401(k) to Roth IRA as well. It’s simpler too, as Roth 401(k) to Roth IRA conversion is non-taxable. Convert Roth 401(k) to Roth IRA, wait 5 years, and withdraw at your own leisure.
As you may have guessed, HSA balance can also be accessed before the age 65. But it does come with a caveat.
You see, HSA allows you to pay for qualified medical expenses tax-free. No taxes on withdrawal, tax-free growth, and no taxes when paying out. However, these qualified medical expenses don’t expire. As long as you had an HSA account at a time of medical expense occurring, you can get a refund on that medical payment.
This is something that we’re doing – banking medical receipts (which isn’t hard, given the overpriced American healthcare system) to cash in at a later date.
There’s a number of ways to access retirement accounts in the United States. Be it through Roth conversion ladder, 72(t) SEPP, or even by using old medical receipts. And now I have somewhere to look back to once I inevitably forget how any of this works.