What’s Your Preference: Financial Freedom or Retirement?
A self-directed IRA can get you to both with investments in alternative assets
Retirement for American workers—how it looks, what we want and how we get there—is changing. Franklin Templeton’s recent Voice of the American Worker Survey* revealed that the majority of those surveyed said that path to retirement, and how retirement looks, is different for everyone.
In fact, 80% of survey respondents indicated “traditional retirement” is not an accurate expectation for most people, and 75% said their future financial goals have changed over the past five years.Of note: while more than three-quarters (76%) of survey participants said that the goal of achieving financial freedom appeals to them, only a little over half felt it was achievable. In regard to retirement, specifically—69% found retirement appealing, and 61% thought retirement was likely to be more achievable.
Financial freedom connotes being able to live the life you want with enough savings, investments and cash to do so; of course, this means different things to everyone. So does retirement, which could mean a full stoppage of work, or working part-time—perhaps trying out a new avocation—with time for hobbies and traveling; again, carrying different significance to each individual. This article in Forbes talks about these concepts in greater detail.
In the Franklin Templeton study, “financial independence” was reported to feel more empowering than “retirement” by 81% of participants, especially among women. Respondents also viewed retirement through the lens of their overall well-being.
- More than half (57%) of respondents say their financial well-being includes health and lifestyle rather than being all about the money.
- Along physical, mental and financial health criteria, nearly three-quarters (74%) said their current physical health, 70% said mental health, and 65% said financial health are associated with well-being.
- Many reported that they struggle to get a holistic view of their financial health, having to go to multiple sources (61%), and nearly 90% would like more planning tools and resources to track their financial health and achieve financial independence.
Financial independence and a comfortable retirement? Self-directing might get you there.
Where do YOU stand on financial freedom vs. retirement? At Next Generation, our clients are working on their financial goals using self-directed IRAs (and other types of retirement accounts) as a retirement wealth-building strategy. With a self-directed IRA, investors can include a range of alternative assets, building a more diverse retirement portfolio and meeting their long-term financial goals through these tax-advantaged retirement plans.
Whether you plan to completely retire, cut back on your work, or continue working well into your 70s or longer, you can map out your road to strong financial health by investing in assets you already know and understand, such as real estate, precious metals, private equity, notes, cryptocurrency and more. When you open a self-directed IRA with Next Generation, you’ll also have access to all your statements and reports to track your goals and make well-informed investment decisions—backed by a third-party administrator that handles all mandatory filing and a custodian that holds the assets.
As you work out a long-term financial plan with your trusted advisor—and determine what financial freedom means to you and the lifestyle you desire during retirement—we invite you to learn more about how and why a self-directed IRA could be a powerful part of your plan. At Next Generation, we’re here to help. You may schedule a complimentary education session with someone from our team, email NewAccounts@NextGenerationTrust.com or call 888.857.8058 with your questions about self-direction and the many types of alternative assets these plans allow.
*The Harris Poll conducted the study on behalf of Franklin Templeton in October 2020 among 1,007 employed U.S. adults, all of whom had some form of retirement savings.
Americans are Working Longer
Recent research from the Transamerica Center for Retirement Studies* shows that Americans are working longer, with 54 percent saying they expect to work past age 65 or never retire at all. Twenty-two percent of respondents said they plan to retire either at age 65 or later, and 22 percent plan to retire earlier.
While there are personal factors around why Americans are working longer – such as maintaining social connections, longer lifespan and emotional health – financial factors are also part of this story. In the U.S., it’s often not having enough saved for retirement and Social Security concerns; three-quarters of the workers surveyed said they are worried that Social Security will not be available when they retire.
Global expectations around retirement age are very interesting to look at and compare with U.S. figures. Transamerica conducted additional research across 15 countries, in collaboration with the Aegon Center for Longevity and Retirement. While the current expected age of retirement in the U.S. is 66 (shared by the United Kingdom and Australia), it is 65 in many European countries and Canada, 60 in India, and 58 in Turkey and China. The findings are based on 14,400 workers and 1,600 retired people surveyed online between 22 January and 14 February 2019.
However, as we know, the average retirement age is rising in the U.S.; for Americans born in 1960 and later, it is 67. The Netherlands is already there and according to the study, France, Spain and Poland are planning to move their retirement age to 67 as well.
Americans are Working Longer, but a Self-Directed IRA Can Help Make the Most of Your Employment and Retirement Timelines
In the Transamerica/Aegon global study, a majority of respondents said they envision an active retirement, where work and leisure can co-exist. Sixty percent cited travel and 57 percent cited spending time with family and friends as important retirement goals; 49 percent said they look forward to pursuing new hobbies. Additionally, 27 percent aspired to do volunteer work and 26 percent planned to include some form of paid work. The two biggest retirement concerns were declining physical health and running out of money.
Whether you retire at age 65 or 66, or continue to work in some capacity well into your retirement years, you can make the most of your retirement savings through self-direction. A self-directed IRA allows you to include many alternative assets, which are not allowed in typical retirement plans, and build a more diverse retirement portfolio. This also allows investors to hedge against the volatility of the stock market, and include nontraditional investments they already know and understand. Why limit yourself to stocks and bonds when you can invest in real estate, precious metals, promissory notes, private equity and joint ventures—and have more control over your returns—within a self-directed IRA?
At Next Generation, we help individuals make the most of their retirement savings and live up to their retirement goals through self-directed retirement plans. If you’re someone who’s comfortable making your own investment decisions and conducting your full due diligence about certain types of investments, you may benefit from self-direction.
Plus, with the SECURE Act provisions that enable workers to continue contributing to a Traditional IRA for a longer timeline, and delay taking required minimum distributions from their plans until age 72, there’s more time to build up one’s retirement nest egg with a broad array of nontraditional investments.
Want to learn more? Sign up for a complimentary educational session about self-directed IRAs with one of our knowledgeable representatives. Alternatively, you can call us directly at 888.857.8058 or email NewAccounts@NextGenerationTrust.com.
*Online survey conducted between October 26 and December 11, 2018 among a nationally representative sample of 5,923 workers who were U.S. residents, age 18 or older; and full-time or part-time workers who are not self-employed and work in a for-profit company employing one or more people.