Don’t Let the Unexpected Throw Your Retirement Off Course—Diversify Through Self-Direction
Published on June 7, 2013
A survey by Ameriprise Financial shows that on average, retired and pre-retired Americans have lost $117,000 in retirement savings due to unanticipated events. That’s a lot of capital to recoup. Big hits from the recession have played a key role in hampering future retirement comfort and savings, experienced as low interest rates on investments, the decline in the market, and less home equity to count on today.
However, the recession isn’t the only unexpected factor affecting people’s retirement savings; others reasons Americans are struggling with retirement savings include supporting a child longer than expected due to the bad economy, paying off college loans without finding a decent job to help make those payments comfortably, or healthcare expenses.
Another problem is that Americans have a relatively poor track record for saving; many people wait too long to save or don’t put aside enough money for later. In fact, many middle-class Americans withdraw large sums from their 401(k) plans before they retire, because in America we like to spend now—on lavish vacations, hobbies, restaurant dining, or “got-to-have-it” items such as home electronics.
SAVING FOR RETIREMENT IS TOUGH
Speaking of saving, USA Today reports that fifty-eight percent of American workers are not even in a pension or 401(k) plan, and an international study* concluded that compared to workers in other countries, U.S. employees are at a disadvantage in terms of having a stable pension system. Add to that the reduction of employer-based health benefits (and less medical coverage), and the sharply rising cost of health insurance which many business owners and the self-employed are paying—all which negatively affect retirement savings.
At Next Generation Trust Services, we understand that life happens, and we can’t stress enough how important it is to invest in your retirement early and often! For individuals who know and understand how to invest in nontraditional assets, doing so through their retirement plan is a great way to build up a diverse portfolio beyond stocks, bonds, and mutual funds.
Before the unexpected happens—another recession that whittles down your money market account, or a family situation that eats away at your disposable income—consider opening a self-directed IRA to build your retirement portfolio. You can get more bang for your hard-earned buck when you diversify your retirement investments through the alternative assets allowed through self-direction. You can read all about self directed IRAs here, or contact us as Info@NextGenerationTrust.com with any questions you have about how to open or invest in a self-directed retirement account.
*Conducted by the Mercer consulting firm and the Australian Center for Financial Services