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Are You Approaching Retirement? Consider Speeding Up Your Savings Through Self-Direction

Are You Approaching Retirement? Consider Speeding Up Your Savings Through Self-Direction

The U.S. Census Bureau has reported that more than 3.1 million Americans age 55 or older have retirement income on their minds. The bureau’s Household Pulse survey, conducted between March 3 and March 15, 2021, reveals that these respondents expect to apply for Social Security benefits earlier than they had originally planned because of the COVID-19 pandemic. The subsequent survey, conducted between March 17 and March 29, showed that more than 2.7 million people planned to apply for Social Security earlier than they’d planned due to COVID.

While those early retirements will mean good news regarding job openings for younger workers, it will mean permanent cuts in monthly benefits for those who claim Social Security earlier than full retirement age (as well as their spouse or beneficiaries).

Consider this alternative to Social Security

Rather than rely on Social Security—which was conceived as a safety net, not to replace full working income—rely on your investment expertise. If you are knowledgeable about certain alternative asset classes, you can build up (and potentially speed up) your retirement savings through a self-directed IRA—or, as a business owner or solopreneur, with a self-directed SIMPLE IRA, SEP IRA or self-directed solo 401(k).

The Social Security Trust Fund’s long-term viability has long been called into question. However, one thing self-directed investors should not have to question is their confidence when it comes to making their own investment decisions, their ability to thoroughly research the non-traditional investments they wish to include in their retirement plan, and their willingness to stay abreast of the markets and assets in which they invest.

These individuals are actively working to boost their retirement savings by including a broad array of non-publicly traded, alternative assets, within their plans. That way, they not only diversify their retirement portfolios and build a hedge against stock market volatility, they can also take advantage of interesting investment opportunities that arise with such assets as real estate, precious metals, private equity, hard money loans, promissory notes, energy rights, music royalties and more. Alternative assets tend to be non-correlated with the stock market, therefore, this strategy also allows for added diversification and control over investment returns.

If claiming Social Security early is not in your plans, and you’re comfortable making your own investment decisions and conducting full due diligence on your investments, self-direction can be a great way for you to build retirement wealth. Take the first step by opening a new self-directed account at Next Generation, where you get comprehensive, superior service you can always rely on—with account administration, transaction support, and custodial services under one company umbrella.

If you need more information about how self-directed investing works, or the types of alternative assets these plans allow, you can schedule a complimentary educational session with a knowledgeable member of the Next Generation team. You may also contact us directly via phone at 888.857.8058 or email to

Social Security Cost of Living Adjustment (COLA) for 2021

It was announced in mid-October that Social Security beneficiaries will see a 1.3% cost- of-living adjustment (COLA) in their monthly distribution checks, effective January 1, 2021. The Social Security Administration says this is in line with prior years’ increases, although it is slightly smaller than the 1.6% increase in 2020 and a more significant 2.8% bump to monthly checks in 2019. Looking back over a longer timeline, the COLA was zero several times (2010, 2011, 2016) and only 0.3% in 2017. Back in the 1970s and 1980s, the figures are much higher, ranging from around 6% in 1977 to 14% in 1981.

Given the financial effects of the COVID-19 pandemic on many Americans, including those receiving Social Security checks, that 1.3% increase won’t go too far in many areas of the country. According to the Social Security Administration, the average monthly benefit increase will be as follows for various categories of recipients:

Some other changes coming in 2021 are:

Calculating COLA
The cost-of-living adjustment is based on the consumer price index for urban wage earners and clerical workers. However, this formula focuses on younger workers under age 62, who are not claiming benefits nor having Medicare payments deducted from their monthly Social Security income. Let’s not forget the rising costs of living seniors face in general, which outpace that COLA amount—food, housing, and prescription drugs among them.

There is a groundswell to change the COLA calculation to the consumer price index for the elderly instead. This is the Social Security 2100 Act, which is being put forward by Congressman John Larson of Connecticut. It expands benefits for current and future recipients, cuts taxes on the elderly, and aims to keep the Social Security Trust Fund solvent through the rest of this century.

Social Security is not so secure
Any way you slice it, relying heavily (or in many cases nationwide, solely) on Social Security for one’s retirement income does not bode well for today’s retirees —especially right now, when the fund is scheduled to be insolvent by 2033. Being more proactive about retirement saving can provide more stable financial health during one’s working and retirement years.

While Social Security benefits provide a financial safety net as per the program’s original intent, in today’s world, those benefits don’t stack up for individuals seeking to retire comfortably and maintain their accustomed lifestyle. That’s where self-directed IRAs and the nontraditional investment they allow can really shine.

Self-directed IRAs allow account owners to include a broad array of non-publicly traded, alternative assets, such as real estate, private equity, notes/loans, precious metals, and so many more. Self-directed investors can be proactive as well as nimbler about how they invest for their later years. That’s because, as individuals who make all their own investment decisions, self-directed investors can take advantage of market shifts and opportunities, and invest in many alternative assets they already know and understand, and that provide a hedge against stock market volatility.

At Next Generation, we’re all about client education. You can read more about the different types of self-directed retirement plans for individuals and business owners here. You may also schedule a complimentary educational session to get the information you need to decide whether self-direction is the right retirement strategy for you. Our helpful team is here to answer questions as well; you may contact us directly via phone at 888.857.8058 or

Will Social Security Benefits Support Your Retirement Age?

Although individuals can claim Social Security benefits as early as age 62, the retirement age associated with full Social Security benefits had been 65 for many years. That marker has been creeping up over time, with the number currently set at age 67 for people born in 1960 or later. The goal has been to encourage Americans to retire later; the Social Security Trust Fund is only solvent through 2037 and delaying benefits will help shore up the fund.

However, according to a paper titled, “How Sticky is Retirement Behavior in the U.S.? Responses to Changes in the Full Retirement Age,” the increase in full retirement age is not stopping many Americans from retiring and claiming Social Security at the age of 65. The study, published by the National Bureaus of Economic Research (and reported in Investment News) posits that Congress needs to develop new policies – in addition to increasing full retirement age –  to get Americans to retire later.

Adding to this conundrum is the effect that the COVID-19 pandemic has had on the economy and personal finances, with historic levels of unemployment or reduced work. It’s unclear right now how this will play out, but one writer foresees trouble ahead for people born in 1960—who are turning 60 years old this year—because of how Social Security benefits are calculated.

This may cause many Americans to re-evaluate their retirement timeline, as they may need to work longer as a financial necessity. This is especially true for those who have not been contributing to a retirement plan.

Build a more supportive portfolio with a self-directed IRA

Many people already understand that Social Security may not be there for them throughout their retirement years or be sufficient to rely on as a sole source of retirement income. As a result, most have retirement plans to support them in their later years. For those who’ve been planning for retirement with a self-directed IRA as part of their portfolio, they understand the need to take control of their retirement planning and diversify their investment allocations.

Self-direction enables investors to include a broad array of non-publicly traded, alternative assets within their IRAs, which provide a hedge against stock market volatility while building retirement wealth. It’s a proactive approach for individuals who are comfortable making their own investment decisions, and who understand nontraditional investments such as real estate, private equity, precious metals, lending, partnerships and  more.

Are you looking to shift your retirement strategy to include alternative assets you already know and understand? Do you want to develop a retirement portfolio that reflects your interests or an area of expertise? If you’re comfortable making your own investment decisions, it’s a great time to plan your retirement from a different perspective. You’ll find a plethora of information about self-directed IRAs on our website. If you have questions about how to get started, you can schedule a complimentary educational session with someone from our team.  Alternatively, you can contact us directly via phone at 888.857.8058 or email at

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

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

Are You Headed for a Retirement Income Crisis?

Financial advisor Ric Edelman (founder of Edelman Financial Services) was on Capitol Hill this summer with an urgent message for lawmakers: beware the retirement income crisis that will hit in 14 years. He was speaking at an event called “Planning for 75 at 25: Saving for Retirement and How Policy Affects You.” The event was held by the Funding Our Future Coalition, an organization launched by Edelman and the Bipartisan Policy Center in February.

His bottom line was this:

Edelman added that many Americans—including sitting members of Congress who came into office long after the law was passed—are unaware of this legislation.

Open a self-directed IRA and head away from a retirement crisis

As many savvy investors already know, saving for retirement with a self-directed IRA is one way to avoid the forecasted economic crisis during one’s retirement years. By building a more diverse portfolio with alternative assets, and by making all your own investment decisions, you’re in control of your future. Whether you include real estate, precious metals, private equity, commodities, or other nontraditional investments allowed in a self-directed IRA, you can grow your retirement savings with the same tax advantages of regular retirement plans, but with far more investing options.

You can read up on self-direction as a retirement strategy in our whitepaper library and our handy starter kits will help you open an account. The team at Next Generation is here to answer any questions you have about self-directed IRAs; contact us at 1.888.857.8058 or

Retirement Savings Fall Short of What We’ll Really Need

When we’re working, we are acutely aware of how our income matches up against our cost of living. But what will that cost of living be when you’re no longer working? If you’re planning on retiring, it’s more than you think and you may not be as prepared as you need to be. In fact, according to Northwestern Mutual’s 2018 Planning & Progress Study, a third of Americans have saved less than $5,000. That means those US pre-retirees have only enough in savings to last a few months if they had to retire tomorrow. Could you manage that?

Why the shortfall in retirement savings?

One reason many people haven’t saved enough is that they’ve underestimated the amount of money they’ll need for retirement.

A new Schroders study states that pre-retirees aged 55 and older underestimate this amount by a sizable margin and to make that worse, they have not saved enough even for that underestimated figure:

Plus, Gallup reports that some Americans may be betting that they can rely on Social Security benefits to cover living expenses. However, if Congress doesn’t reinforce the Social Security Trust Fund, it could be insolvent by 2034—which does not bode well for people at age 50, approaching retirement age.

A third retirement expense gap – healthcare costs

In addition to misjudging the cost of living and not saving the funds they’ll need to cover their day-to-day expenses, many pre-retirees don’t appreciate how much of their Social Security benefits could wind up going to healthcare costs. A Nationwide survey notes that a retiree who claimed Social Security at 62 can expect to spend about 64 percent of their Social Security income on health expenditures. That does not leave much for other daily living expenses and the leisure activities so many people look forward to when they stop working.

Self-direct your savings solution

What’s the solution to ensuring that your retirement doesn’t get derailed by miscalculating expenses? For many investors, it could be a self-directed IRA.

With a self-directed IRA, you can take control of your future, bolstering your retirement nest egg by investing in alternative assets that you know, understand, and may already be investing in outside of your existing retirement plans.

Don’t underestimate the cost of living in retirement – it will only continue to rise – and don’t underestimate the value of self-direction. You can open a new account with a relatively small amount of money, enjoy all the same tax advantages of regular plans, and build a more diverse portfolio that you control. For savvy investors who are comfortable making their own investment decisions, a self-directed IRA can often be the difference between a short fall and no fall.

Read more about self-direction in our white paper library or contact Next Generation with your questions; call us at 1.888.857.8058 or email

Retirement Challenges for Younger Baby Boomers

Older baby boomers began reaching full retirement age in 2010 and may have positioned themselves for a more comfortable retirement than younger boomers. Younger baby boomers (individuals currently aged 53 to 62) have begun to face serious challenges related to their retirement finances, for several reasons:

They are less likely to have a traditional pension than older Americans, in large part due to the dramatic decline in defined benefit pensions.

According to the Center for Retirement Research at Boston College, 88 percent of all private-sector employees had a pension in 1975 compared to only 33 percent today. Even for those with pensions, many plans were frozen after 2006 when the Pension Protection Act went into effect.

Family-related financial issues.

For people in their 50s and early 60s who are helping cover their children’s college tuition costs, those expenses are higher than ever. According to the College Board, tuition, fees, and room and board for one year at a private, nonprofit four-year institution is now $46,950; it was $29,530 in 1997 (adjusted for inflation). For state schools, these expenses have risen in the past 20 years from $11,860 to $20,770 per year.

The “boomerang” generation of college grads came back to live at home as they try to establish careers and help to pay off student debt. Many are being carried on their parents’ health insurance plans through age 26, which curtails their parents’ ability to save.

An aging baby boomer generation suggests an increase in the number of aging parents who may need help meeting the costs of long-term care, for a longer time period.

The lingering effects of the economic downturn and Great Recession, including lower stock returns than in prior generations.

Less security around Social Security.

Boomer couples born before Jan. 2, 1954 can still file a restricted application for Social Security benefits, meaning that spouses can claim spousal Social Security benefits only, while allowing their own benefits to grow 8 percent annually until they hit age 70. Those born after that date cannot do so.

The age to get full benefits is creeping up. Americans born from 1960 on will have to wait until age 67 for full benefits.

The Social Security trust fund is projected to run out of funds in 2035, when the youngest boomers turn 70 years old. And in other bad news, Medicare’s Hospital Insurance Trust fund is projected to be exhausted by 2029, when they turn 65.

Adding salt to the retirement finance wound is the national savings crisis.

We have written many times in the past about the lack of savings by Americans in general and it becomes critical for those nearing retirement age.

Boost your prospects with a self-directed retirement plan

While self-directing your retirement plan won’t bring back a healthier Social Security trust fund or secure Medicare’s future, it is a way to develop a more diversified retirement portfolio that can help you rise to the challenges faced by those who are trying to save for their post-employment years. These tax-advantaged plans may include many types of nontraditional investments that are not allowed in traditional plans, based on what the investor already knows and understands. These non-publicly traded alternative assets can be a great way to build retirement wealth without relying on the stocks, bonds, and mutual funds offered by many banks, brokerage houses, and typical workplace employee benefit plans.

Are you already a savvy real estate investor who invests in rental properties? Would you like to arrange a loan through your IRA, with terms you and the borrower set? How about including investments in startup companies in your plan? It’s all possible through self-direction within a retirement plan – Traditional or Roth IRA, SEP IRA, SIMPLE IRA, or solo(k) plan), Coverdell Education Savings Account, or a health savings account (HSA) – at Next Generation Trust Company. If you’re someone who is comfortable doing the necessary research and making your own investment decisions, self-direction could be the strategy you never knew you needed.

Want to know more? You can read up on self-direction as a retirement wealth-building strategy on our website or visit our YouTube channel for informative videos that will help get you started. You can always call us with your questions and immediately speak to a live person for assistance at 1-888-857-8058, or email us at