So I promised you a post about what I would do with the money in my Vanguard retirement accounts, now that I’ve sold off my entire investment portfolio.

Currently, my retirement savings have been transferred to VUSXX, the Vanguard Treasury Money Market Fund. This is still technically an investment, and it can still technically lose value. If Vanguard has issues with liquidity in the future — and/or if there is a potential run on money-market investments — it could temporarily freeze my access to this account. That’s what happened to money-market investors in 2008, after all.

I’m not precisely thrilled with this plan, but it’s not like I have a better option. If you want to get the tax breaks associated with saving for retirement, you have to give control of your money to someone else. At that point, they can use your money to make money for themselves and other people (including corporations, which are technically people); you get returns or losses depending on how that whole money-making thing pans out. Your wins and losses are also dependent on whether other people (including corporations) are able to redeem the increased market value before you do — because your gains only become real when you sell.

Why play the retirement savings game at all? Since many of us are more likely to spend our money than use it to make more money (in part because many of us don’t have enough money to play the wealth-building game, which is also why people collaborate with other investors in the hopes of increasing their net worth through returns) this responsible personal finance strategy can be a win-win. Playing the game also gets you access to things like the 401(k) company match, which is “free money” — but if you’re reading this blog, you already know all of that.

But what if you’re me? Do you continue putting money into retirement accounts and going after the associated tax breaks, or do you decide to do something else with your freelance earnings?

In preparation for this week’s blog post, I re-read David McKnight’s The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement. Essentially, he wants as many of us as possible to configure our retirement savings so that our annual distributions are less than the standard deduction, ensuring that we pay zero taxes on our retirement dollars. Getting to the 0% tax bracket in retirement prevents other knock-on effects, such as the amount of tax we pay on our Social Security benefits. It’s an interesting plan, and one that could save people more money than they realize.

In my case, I’m “doing the plan” without having to do anything. If I don’t add any more money to my retirement accounts, I won’t have any problem taking annual distributions that are lower than the standard deduction. This also means I don’t really have to worry about Roth conversions or anything like that — I could leave the money exactly where it is for the next 19 1/2 years and still pay zero taxes on my distributions.

But what should I do with this year’s income? McKnight makes the interesting point that, until the Tax Cuts and Jobs Act expires in three years, ten months, and four days (according to the counter on McKnight’s website), federal income taxes are likely to be some of the lowest we’ll see in our lifetimes.

This could mean that paying taxes now would be less expensive than paying taxes later. It could also mean that paying taxes now would be less expensive than putting money into a tax-deferred retirement account that pushes you out of the 0% tax bracket in retirement.

This is where I need to start doing math.

Like, a lot of math.

My instinct is to ramp up my freelance earnings for the next three years, ten months, and four days.

To pay the taxes in full, in part because I am unlikely to earn enough to bump me from the 24% to the 32% tax bracket (yes, I know that there are also self-employment taxes involved, point still stands).

To keep the money in a high-interest savings account (even though these “high interest rates” are the lowest they’ve ever been), because putting it in a retirement account comes with both investment risk and early-withdrawal penalty.

Not that I plan to spend the money right away. I want a million dollars in cash by my 50th birthday, after all — and that means saving, not spending.

More importantly: If something comes up that’s worth part of my net worth, I want to be able to access my accumulated earnings without having to pay anyone. No penalties. No fees. No having to find a buyer for what I’m selling.

That’s why I’m not putting money into the market right now, and why I may not put any more money into retirement accounts.

But I really ought to do the math first, to make sure I’ll come out ahead even without the tax advantages of the traditional and SEP IRA. ❤️