Are You Financially Prepared for a Secure Retirement?

Published on January 29, 2019

The Insured Retirement Institute (IRI) released a study this fall indicating that recent retirees – for the most part – are financially secure because of the guaranteed income they receive from pensions and Social Security. However, that report, “Retirement, Income and Risk,” also found that future retirees have a lot of catching up to do when it comes to accumulating retirement savings. That’s because only around 17 percent of private sector workers still have access to a traditional pension plan.

IRI’s survey, among retired American workers with at least $100,000 in savings, found that more than 80 percent report income of at least 75 percent of what they earned before retirement. Additionally:

• Only about 1 in 6 of those current retirees rely on Social Security for more than half of their retirement income
• Two-thirds rely on an employer pension for at least 25 percent of their income.
• Most retirees with personal retirement savings are only tapping those accounts due to the legal requirement to take minimum annual distributions

However – as the IRI president and CEO pointed out in the report – many future retirees will not be covered by a defined benefit pension, have not saved enough for a long retirement, and they will be relying on Social Security as their only source of guaranteed lifetime income. An earlier IRI study showed that 42 percent of Baby Boomers have no retirement savings and 38 percent have less than $100,000 saved. Considering our longer lifespans, retirement could last 30 years for many Americans and that $100,000 (or less) will not go far.

Social Security was set up to supplement one’s retirement income, not serve as an individual’s sole source of retirement income. With workplace pension plans disappearing, fewer companies offering employer-sponsored retirement plans, and the rise of the self-employed, it becomes ever more important for individuals to open an IRA and start saving.

Prepare for your retirement with a self-directed IRA

For those who want to take control of their future, a self-directed IRA can be a great way to boost retirement savings. Rather than rely on a Social Security trust fund that’s ailing or a changing employment landscape that no longer guarantees the same benefits packages of generations past, savvy investors can open a self-directed IRA—one that includes alternative assets that can set the stage for more robust retirement savings.

For one thing, by including such assets as real estate, commodities, precious metals, or private equity, investors can build a more diverse retirement portfolio. This enables them to avoid the ups and downs of a volatile stock market or have their money stuck in long-term bonds that may produce lackluster yields. And, as the moniker implies, self-directed investors are in control, making all their own investment decisions based on assets they already know and understand.

Learn more about self-directed IRAs in our whitepaper library, open an account using our starter kits, or contact Next Generation for additional education: call 1.888.857.8058 or email NewAccounts@NextGenerationTrust.com.