Retirement Savings and Your Physical Health: Is Your IRA Helping You Live Your Best Life?

Did you know that your financial health may affect your physical well-being?

The BlackRock Global Investor Pulse survey is the world’s largest global study on the relationship between wealth and well-being. The latest one interviewed 27,000 respondents in 13 nations: the US and Canada; Germany, Italy, Switzerland and the UK; Brazil, and Mexico; and China, Hong Kong, Japan, Singapore and Taiwan.

Across genders, ages and income levels, one thing was clear: 69 percent of respondents reported that their financial health had a significant influence on their well-being. Of the 4,000 U.S. survey participants, 78 percent with a retirement savings plan reported an overall sense of well-being compared to 52 percent without one.

Of the respondents, only 56 percent had started to save for retirement and just 45 percent felt confident they would achieve their ideal lifestyle.

Despite the youngest age group, Millennials reported a higher level of worry about their finances than the others. However, 84 percent believed their financial futures would improve if they started investing.

Given that so many people associated saving for retirement with greater contentment, why is there still such a high level of non-participation in retirement savings plans? Many in the survey claimed they were too worried about their current financial situation, citing the high cost of living and health care costs.

Want to improve your financial health and personal outlook? A self-directed IRA can help.

The cost of living is not going to drop and health care costs will continue to rise—as will most consumer goods over our lifetimes. However, if the BlackRock study tells us anything, it’s that investing today for our futures will help improve our well-being both physically and financially.

For those who want to improve their financial health, investing in alternative assets through a self-directed IRA can help. A self-directed IRA—whether Traditional, Roth, or other—is a great way for individuals to take control of their futures with non-traditional investments they already know and understand. As you build retirement wealth, you’ll not only be improving your financial future, but quite possibly, your general outlook on life.

For savvy investors who are comfortable doing their own due diligence and making their own investment decisions, self-direction is a great way to build a more diverse retirement portfolio—one that you’ll feel good about.

Perhaps you are already making investments in real estate outside of your existing retirement plan. Or maybe you have enough cash saved to invest in a friend’s startup. These are just two examples of how you can use the funds in a self-directed IRA to invest in alternative assets. You can learn more by signing up for our monthly newsletter.

When you open an account with Next Generation, we execute the transactions for you, hold the assets, and provide client education and guidance regarding self-directed investing. We’re confident you’ll find our high level of service is something else that makes you feel good about saving for retirement through self-direction.

Have a question about self-directed retirement plans? Email Next Generation at NewAccounts@NextGenerationTrust.com or call us at 1.888.857.8058 for more information about how self-direction can improve your retirement plan’s outlook. Alternatively, you can register for a complimentary educational session with one of our representatives.

Impact of Forced Retirement and Loss of Retirement Income on Older Workers

A sobering article on ProPublica in December said that more than half of workers in the United States age 50 and older are pushed out of their longtime jobs before they wish to retire. Given the effects of January’s government shutdown, one can imagine the financial hardships that a forced, early retirement may have on many workers and their families.

ProPublica and the Urban Institute analyzed data from the Health and Retirement Study, which, since 1992, has followed a nationally representative sample of approximately 20,000 people aged 50 and up. The study focuses on those with stable, full-time jobs and who have been with the same employer for at least five years. The newest report stated that:

• Fifty-six percent of older workers are laid off at least once or leave jobs under financially damaging circumstances between the time they enter the study (age 50) and when they leave paid employment.
• The number of respondents saying their retirement was forced or partially forced rose from 33 percent in 1998 to 55 percent in 2014.
• Only 10 percent of these workers ever earns as much again as they did before the employment disruption.
• For years, over 50 percent of them suffered with significantly lower household incomes than their peers who did not have their work lives disrupted.
• Another 15 percent reported that they quit their stable jobs after pay, hours, locations or treatment by supervisors deteriorated.

These employment disruptions imply that steady earnings are not a given for many Americans during their 50’s and 60’s. Adding salt to the wound, those lower earnings mean less retirement savings and lower Social Security benefits—especially for those who must claim those benefits earlier than originally anticipated.

With 40 million Americans aged 50 and older who are working, this trend can have very serious effects on their ability to plan for a comfortable retirement. Moreover, with fewer employers offering traditional pension plans, the retirement gap will continue to widen for many people.

While you can’t control your employer’s actions, you can control how you build your retirement nest egg, through self-direction.

If you’re like many Americans who are saving for retirement on their own—with a Roth or Traditional IRA—a self-directed retirement plan at Next Generation can help you build a more diverse retirement portfolio with alternative assets you already know and understand. You can self-direct a Roth or Traditional IRA and include many non-traditional investments not allowed in typical plans, such as real estate, precious metals, private equity, and commodities. If you are self-employed, you can establish a self-directed “solo” 401k or SEP IRA.

Self-directed IRAs have the same contribution limits as their regular counterparts (up to $6,000 in 2019 for IRAs); and, if you are over age 50, you can take advantage of the same catch-up contribution amounts—adding an extra $1,000 a year to your self-directed IIRA. You can open a new account at Next Generation and transfer over from any like-IRA, or roll over from any employer sponsored plan (such as a 401k).

We invite you to learn more about self-direction as a retirement strategy by watching our on-demand webinars or educational videos. We’re sure you’ll have some questions if self-direction is new to you, so email us at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058. We have the answers to your questions about self-directed retirement plans, so you can start taking control of your future, today. Whether you’re in your 50’s or your 20’s, Next Generation is here to help.

As an alternative, you can register for a FREE educational session with one of our representatives.

Higher Contribution Limits in 2019 for Retirement Plans

Good news for hard-working individuals with retirement plans: those plans are going to work a little harder for you this year. The IRS has increased 2019 contribution limits for some types of retirement plans so you can save more and potentially earn more in returns, depending on how you invest.

• For workplace plans such as 401k, 403b and most 457 plans, employees can contribute up to $19,000 a year in pretax funds (up from $18,500 in 2018).
• The annual contribution limit for Traditional and Roth IRAs—which had not increased since 2013—is now $6,000 (up from $5,500 in 2018).
• Catch-up contribution limits for employees who are 50+ years old remain the same as in 2018: $6,000 for workplace plans and $1,000 to an IRA.

In addition, income ranges that determine one’s eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs, and to claim the saver’s credit on a tax return have also increased for 2019—so more people will be able to fund those retirement plans and claim the tax credit. Much depends on your income level, filing status, marital status, and whether you have a workplace retirement plan. You can read all the stipulations here or consult with your trusted tax advisor.

Here’s one thing that hasn’t changed about retirement plans—the benefits to savvy investors who save for retirement with a self-directed IRA.

Take advantage of higher contribution limits and a broader range of investment options

While the tax advantages and contribution limits for self-directed IRAs are the same as for regular retirement plans (of the same type), the investment options in self-direction are vast and varied.

Self-directed retirement plans enable investors to include a broad array of nontraditional investments within their plans, which gives them the potential to maximize the return on their annual contributions through investments in real estate, precious metals, private equity, unsecured or secured loans, and other non-publicly traded assets. If these are types of assets you already know and understand, and want to take advantage of your investment knowledge and those higher contribution limits, your time is now.

Plus, when you open a self-directed IRA at Next Generation, you can also lean on our team of professionals who provide personalized service for a seamless transaction experience from start to finish, while also educating our clients to remain in compliance with IRS guidelines.

Next Generation also helps clients increase their understanding of self-directed retirement plans with educational resources, such as webinars and whitepapers. We invite you to check out a webinar or sign up for whitepaper access to read more about this retirement savings strategy.

Have a question about contribution limits to your self-directed IRA or about the alternative assets allowed in these plans? Email NewAccounts@NextGenerationTrust.com or call 1.888.857.8058. We’re here to help!

As the Stock Market Tumbles, Can Your Retirement Savings Weather the Storm?

December 2018 was not kind to the stock market, with U.S. stocks falling about 10 percent—posting their worst December since the Great Depression. Many retirees fear their losses in the market will deeply affect their retirement nest egg. Rumors of a possible recession in the near future add fuel to that fire, along with the following:

• Apple, Samsung, beverage conglomerate Constellation Brands, and home builder Lennar have lowered their financial forecasts.
• 72 S&P 500 companies issued earnings warnings during the fourth quarter of 2018.
• Analysts are now looking for single-digit earnings growth for the first three quarters of this year.

While working, Americans still have time to make up for declines in investment values or bad investment moves. However, retirees who are no longer contributing to a retirement plan could be in for a scary ride. With fewer traditional pensions available in the workplace—replaced by more 401(k) plans and IRAs—investors of all ages need to become savvier about how they invest their retirement funds.

Weather the stock market storm with a self-directed IRA

Are you among the investors whose stock portfolios tumbled in recent months? It can be harrowing, wondering if you’ll have enough to live on during your retirement years—even after all the years you’ve been putting money into a retirement plan. Whether your retirement time horizon is in the distance or approaching in the foreseeable future, there are strategies available to catch up on your retirement savings. One emerging and popular option is to utilize a self-directed IRA.

For investors who know and understand nontraditional investments outside of stocks, bonds, and mutual funds, investing through a self-directed IRA means stepping away from the stress of an up-and-down stock market or sluggish bonds. Instead, savvy investors can include an array of alternative, non-publicly traded assets within their self-directed retirement plan, such as real estate, private equity, precious metals, and many more.

Self-direction enables investors to control their investments and their futures by building a more diverse retirement portfolio. As a self-directed retirement plan administrator and custodian, Next Generation makes it easy to open an account with these helpful starter kits. If you have a question about the types of alternative assets self-directed IRAs allow, contact Next Generation by email at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058.

Is Your Retirement at Risk?

As Baby Boomers continue to retire—and age—and therefore the number of retirees is swelling, especially in the 75+ age group. As their numbers grow, so do the financial risks many of them will face.

According to a report from Center for Retirement Research at Boston College, older retirees (a cohort that will increase in number) will rely on inadequate balances in their 401(k) plans and/or Social Security distributions that won’t do enough to cover their living expenses. Three primary risks were cited in the report:

• Cognitive impairment – The report notes that financial skills deteriorate for many people in their 70s. It can be as minor as forgetting to pay certain bills but escalate to an inability to manage finances or make good financial decisions.
• Medical expenses – Out-of-pocket healthcare expenses will continue to increase. The amount of money many Americans will need to cover out-of-pocket medical expenses and long-term care could be in the hundreds-of- thousands-of-dollars range throughout retirement, especially as people age.
• Widowhood — The lack of dual income from Social Security that widows might have expected in the past will hit some widowed retirees in the wallet. It’s important to understand how benefits are based and be aware of what to expect upon full retirement in order to plan accordingly.

These risks could affect the projected 23 million retirees aged 75 and older in 2020 (and in 2040, approximately 43 million retirees according to projections). These factors become largely important when less income is derived from traditional pensions, relatively skimpy retirement plans, and Social Security (especially as the full retirement age rises).

Mitigate retirement risk with a self-directed IRA

The risks mentioned above can hit anyone at any time during one’s retirement years—which makes it so crucial to plan for retirement with ways to mitigate those risks. Investing as usual might not cut it, given the uncertainties of the stock market, dwindling workplace pension benefits, and other economic factors. However, there is an action you can take now to mitigate possible risk to a comfortable retirement: open a self-directed IRA.

A self-directed IRA is one you control, and can include alternative assets you know and understand. It’s a great way to prepare for the future by investing outside of the stock market. Having recurring income from a rental property, royalties from a Broadway show, or other nontraditional investments allowed in these plans can help you plan ahead and build a more diverse retirement portfolio. You might not be able to control the effects of growing older but today, you can control how your retirement plan will be invested through self-direction.

Use our handy starter kits to get your self-directed IRA open and funded. If you have any questions, email our team at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058. We’re here to help.

Are You Financially Prepared for a Secure Retirement?

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.

You Could Work a Little Longer to Build More Retirement Savings—or Invest More Creatively through Self-Direction

Did you know that by working six months longer, workers can reap significant Social Security compounding benefits? A Stanford University economics professor, John Shoven, says that older people who are behind on their retirement savings goals can catch up pretty well and increase their retirement standard of living by working just six months longer (and paying into Social Security).

In his paper, “The Power of Working Longer,” Shoven showed that postponing retirement by just three to six months is equivalent to saving an additional percentage point of earnings for 30 years. Plus, for individuals who are in their mid-60s, working just one month longer is equal to saving ten more years for retirement.

Shoven’s study is geared toward people ages 62 to 69 who have a retirement plan but have saved less money for retirement than they desire, have an annual income up to about $200,000 and who rely largely on Social Security during their retirement years. His model used an inflation-adjusted rate of six to eight percent real returns and assumed a safe strategy of investing mostly in bonds.

However, even with higher risk factored in, Shoven found that working slightly longer was still the better way to raise retirement income. Those extra months enable individuals to contribute more to their retirement plans while also boosting Social Security benefits by continuing to pay into the system.

Working a couple of years longer than originally anticipated—say, retiring at age 66 instead of 64—provides even more income when factoring in contributions to both one’s retirement plan and Social Security. Of course, as with any financial planning around one’s retirement age and when to claim Social Security benefits, it’s always best to consult a trusted advisor.*

 Invest smarter—and make self-direction work for you

If working longer than originally planned isn’t for you, but investing in alternative assets is, you can boost your potential retirement savings with a self-directed IRA. If you start early enough (or are able to make additional catch-up contributions later on), and you are comfortable making your own investment decisions, self-direction can work for you in a number of ways:

You can build a more diverse retirement portfolio that is not dependent on stocks, bonds and mutual funds – or subject to stock market volatility

• You can include nontraditional investments you may already be investing in outside of your existing retirement plan (such as real estate, precious metals, unsecured or secured loans, private equity)
• You’ll enjoy the same tax advantages of regular IRAs – tax deferred or tax free earnings, depending on the type of account you use

So, you can keep that original retirement date on your calendar and start putting a broader array of investments in your retirement plan with a self-directed IRA. Next Generation makes setting up and funding your new account easy with our helpful starter kits, and our team is here to answer your questions about this type of retirement strategy. Contact Next Generation via email at NewAccounts@NextGenerationTrust.com or call us at 1.888.857.8058 or email NewAccounts@NextGenerationTrust.com.

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*Next Generation Trust Company (“NGTC”) does not review the merits or legitimacy of any investment. NGTC does not endorse or recommend any companies, products, services or investments. NGTC does not provide any financial, legal or investment advice.

If the services of NGTC were recommended by any third party, such persons or entities are not in any way affiliated with NGTC. All information provided is for educational purposes only. All parties are encouraged to consult with their professional advisors prior to making any investments.

Next Generation Services (NGS) is a third-party administrator of self-directed retirement plans, located in Roseland, New Jersey. NGS handles all the back office administration, record keeping, mandatory reporting, and transaction support. Accounts are named with Next Generation Trust Company as the custodian and holder of assets, for benefit of the individual account.
NGS does not review the merits or legitimacy of any investment. NGS does not endorse or recommend any companies, products, services or investments. NGS does not provide any financial, legal or investment advice.

If the services of NGS were recommended by any third party, such persons or entities are not in any way affiliated with NGS. Next Generation Services is not a “fiduciary” as defined in the IRC, ERISA, and/or any applicable federal, state or local laws. All information provided is for educational purposes only. All parties are encouraged to consult with their professional advisors prior to making any investments.

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Want to Make a Difference in the World? Invest in a Social Cause Startup through a Self-Directed IRA

High-net-worth women are using their wealth to change the world, support communities and create opportunities. This is according to a study by RBC Wealth Management (in partnership with The Economist Intelligence Unit), conducted in the U.S., Canada, the U.K., China, Hong Kong and Singapore among women with at least $1 million in investable assets. It looked at the top factors that contributed to the growing number of high-net-worth women and how these women are using their money to benefit society. Although limited in scope (365 respondents), some interesting gender and generational statistics emerged:

• Of the U.S. respondents, 60 percent said better education, investments and new technologies helped them generate wealth. Other factors were greater access to information and openness to entrepreneurship.
• More than 60 percent of the wealthiest U.S. participants with $5 million or more of investable assets are the primary decision makers in their households on financial planning, legacy planning and charitable giving.
• Regarding the key factor influencing charitable giving decisions, these women most often cited the ability to make the greatest impact; their male counterparts cited tax benefits.

Generation X and Millennial women are leading the charge for the greater good:

• Forty-three percent in the survey were aligning their spending with causes they cared about, compared to 33 percent of Baby Boomer and older women.
• Impact investing as a form of giving—wherein investors actively seek to make a positive social or environmental impact with their investments—is also more prevalent among younger women (58 percent vs. 38 percent of older women).
• Sixty-three percent of wealthy Gen Xers and Millennials in the U.S. said societal causes had become more important to them than accumulating wealth in defining their legacy. Among their older counterparts, that figure was 40 percent.

The charitable causes favored by these wealthy American women also varied by generation, with some crossover. Both older and younger women named environment/nature and health/health care as their focus but older women named education, poverty reduction, and religious or spiritual causes as their other primary causes. Younger women focused on animal rights/welfare, diversity/inclusion and human rights.

Make an impact with a self-directed IRA

Is there a non-profit organization that’s starting up and whose cause speaks to you? If so, you can become an investor (either directly or through crowdfunding) with funds from a self-directed IRA or self-directed solo 401(k).  From international fair trade initiatives to non-profits that increase opportunities for the underserved, you can include these impact investments in a self-directed IRA—and put your retirement dollars to good use in social or environmental causes that support your values.

With a self-directed retirement plan, you can make an impact investment in mission-oriented organizations that support many types of causes, such as:

• Renewable energy
• Sustainable agriculture
• Affordable housing
• Environmental conservation and education
• Clean water/sanitation projects
• Micro-enterprises that shift people from poverty into income stability

BONUS TIP: Older investors above age 70-1/2 (who must take required minimum distributions) can satisfy their required minimum distribution (RMD) by making a qualified charitable distribution from their self-directed IRA directly to a charity of their choosing.

Want to leave a lasting legacy by supporting a social cause using funds from a self-directed IRA or solo 401(k)? You can read more about self-direction in our white paper library, and our team at Next Generation is available to answer your questions and educate you about this type of retirement strategy. Contact us via email at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058 for more information.

Boomer Bankruptcy is a Growing Trend

With the steady disappearance of corporate pensions, the Great Recession (and the market dip after 9/11), inadequate savings and the rise in healthcare costs, a troubling trend has emerged among Baby Boomers: bankruptcy.

A research report titled, “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” by professors from four major U.S. universities, provides data showing that the bankruptcy filing rate among Americans aged 65 and older has almost tripled since 1991; for individuals 75 and up, that figure has increased nearly 10 times in the same time frame. The report states that “inadequate income and unmanageable costs of health care” are major factors, especially as the social safety net continues to shrink.

There is a stark difference between those retirees who file for bankruptcy and those who do not. The median senior bankruptcy filer has a negative wealth (when household debt exceeds its assets) of $17,390. In comparison, their non-bankrupt peers have a wealth of more than $250,000 in assets. The study suggests that the surge in senior bankruptcy filings has been fueled by a shift in who bears responsibility for financing retirement.

With workplace retirement plans and guaranteed retirement benefits from employers harder to come by for many employees, it is increasingly important for consumers to improve their financial literacy and become more educated about their options for retirement savings.

Take charge of your retirement savings through self-direction

The factors leading to senior bankruptcy are also motivating many investors to become more educated about self-direction as a retirement wealth-building strategy. Self-directed IRAs enable individuals to include many alternative assets within their retirement plans (such as real estate, precious metals and private equity)—investments they already understand and feel they have more control over their return. From younger Millennial workers with a long savings time horizon to older Generation Xers who still have time to catch up, educated investors can build a more diverse retirement portfolio with self-directed retirement plans. In addition to IRAs, individuals may also self-direct a health savings account (HSA), Coverdell Education Savings Account (ESA) and in certain situations, other qualified plans such as 401(k)s.

Education is key

Next Generation offers many ways to enhance your retirement knowledge at any stage of your planning process, with our helpful videos and white papers. We also have a library of monthly newsletters to skim any time and we invite you to check out the events page of our website for the latest opportunities to connect.

If you have a question about self-directed IRAs and how you can get one started, email us at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058.