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Planning a Retirement Spending Spree? Be Sure to Plan on Having Ample Retirement Savings!

Published on August 1, 2023

Retirees and those collecting Social Security enjoyed a significant boost in the cost of living adjustment (COLA) in 2022 and 2023. The 2023 COLA of 8.7% was the largest in 40 years.

It appears that older Americans have also been enjoying something of a spending spree, according to Bank of America Institute’s Consumer Checkpoint. Based on data from debit and credit card transactions, the publication reported that the spending growth among baby boomers (ages 59 to 77 today) and the traditionalist generation before them (78 to 95 years old) surpassed the spending of younger generations—tied partially to that bump in Social Security benefits. And that spending was happening across income levels.

Other factors in the intergenerational spending disparity include lower housing costs and lower debt for retirees than for Generation X and millennials, who are challenged by high rent and high mortgage rates, and student loan repayments.

In short, it appears from this report that many retirees are spending relatively freely right now. But with all the chatter about the Social Security trust fund’s shaky future, and the cost-of-living adjustment predicted to be much lower next year (around 3% according to the Senior Citizens League), are you prepared to be a spendthrift retiree?

Enhance your retirement readiness with a self-directed IRA

Whether you are just starting your career or are in those pre-retirement years, you can open a self-directed IRA and set your savings goals differently—with a comfortable budget during your retirement years. A self-directed IRA enables you to diversify your portfolio with alternative assets that are not allowed in typical retirement accounts.

Those assets’ performance is not correlated with the stock market, so they create a hedge against the market volatility we’ve been experiencing for years. And you can take advantage of investment opportunities in more creative ways, using what you already know and understand to build your retirement savings.

Invest in alternative assets to build retirement savings

You can include investment properties, royalties, precious metals, private equity funding, and many more alternative assets in a self-directed retirement plan, with the same tax advantages of traditional retirement accounts. Taking a long-term investment view, you can get off the stock-and-bond roller coaster and continue to build retirement savings that can help you reach your retirement income goal.

Taking control of your investing through self-direction is empowering—and can better prepare you for a lifestyle that is not solely dependent on Social Security benefits or the whims of stock market returns. Before you map out that future spending spree, we invite you to schedule a complimentary education session with one of our self-direction experts at Next Generation. You can also learn more from our on-demand webinars and other blog articles that cover the many options and benefits of self-direction as a retirement wealth-building strategy.

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