Forget About Social Security in Your Financial Plan; Focus on a Self-Directed IRA Instead.

Published on October 23, 2018

In our last post, “Are You Headed for a Retirement Income Crisis?” we shared some alarming news about the forecasted retirement economic crisis due to hefty cuts in Social Security benefits planned for  2034. That sounds like a distant problem, but someone who is 65 today could very well be dealing with this issue in his or her later years. Millions of retirees depend on Social Security for more than half of their retirement income—and these Americans could be dealing with significant financial hardship due to lack of savings.

While the amount you will get in Social Security benefits when you retire is generally part of many people’s financial plan, estimating those benefits is often difficult due to the variables that go into the calculation for monthly payouts. Factors include your age at which you file to collect, and whether you are claiming benefits before your full retirement age. There are strategies to consider depending on your marital status as well. And then there’s the fact that 18 years from now, those calculations will look vastly different when the cuts take effect.

Here’s a different approach to funding your retirement: close your eyes and make believe there is no Social Security in your future. Try to determine how much you need to save in your retirement plan to fund a comfortable future—one in which whatever you do collect from Social Security will be a nice supplement to your retirement income—rather than the majority of it.

Build more security with a self-directed IRA

Once you and your financial advisor have come up with the amount of money you’ll need to cover your living expenses and support a comfortable retirement, it’s time to think about how you’ll meet those savings goals. Depending on your age, you may need to be more aggressive about the amount you put into your retirement plan every month; if you are in that pre-retirement age range of 50 and over, you should be aware of the catch-up contribution amount.

Here’s another retirement tip: rather than rely solely on the stock market for your investments, open a self-directed IRA and invest in alternative, non-publicly traded assets. Self-direction can be a great way to ramp up your retirement savings with nontraditional investments you already know and understand. Self-direction enables investors to include many different kinds of assets not allowed in typical plans, so you can still diversify your retirement portfolio without worrying as much about Social Security.

For example, if you’re a real estate investor you could include real property in your self-directed IRA. Maybe you already invest in natural resources or have the opportunity to make a private equity investment. These and so many other types of alternative assets can be part of your self-directed retirement portfolio—and those Social Security checks (which are likely to be much smaller in the future) can go towards something fun.

Ready to build a future that doesn’t focus solely on Social Security benefits? Learn more about self-directed IRAs in our whitepaper library, open an account using our starter kits, or contact Next Generation for answers to your questions: 1.888.857.8058 or

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