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What Would The Three Bears Say About YOUR Retirement Fund?

Published on March 1, 2017

Are you saving too little, too much (is that even possible?) or just enough?

The Bureau of Labor Statistics states that roughly half of United States workers participate in a workplace retirement savings plan.   However most of those participants do not calculate how much money they’ll need to fund their retirement,  let alone check to see if they’re even on track to meet that goal.

Some advisers suggest using ages as milestones to gauge if you’re saving enough or not. For example, Fidelity Investments used to recommend for those starting out to estimate one’s salary by age 35 in order to have reasonable financial security in those golden years. However, the firm is now recalculating and moving up that timeline by recommending you save one times your salary by age 30. That means a lot of hustle (and saving) in one’s 20s.

Adding to that hustle is the recommendation to have your savings equal twice your annual pay by age 35, and three times your salary by age 40. By age 67, which is currently the full retirement age for today’s younger workers, you’d better go all Papa Bear on your retirement savings at ten times your annual pay. These guidelines are meant for people who plan to retire at 67 and who want to have their savings provide at least 45 percent of their pre-retirement pay. Those who want to work past 67, will have to anticipate their needs and make adjustments to their expenses or savings.

Don’t hibernate when it comes to retirement savings

Of course, with the behavior of the stock market over the past 20 years, it’s hard to predict future performance and return. With so many Americans struggling to sock enough away while also paying their bills, many people are caught short when it comes to retirement savings. In fact, a 2015 report from the Government Accountability Office revealed that more than half of people age 55 and up don’t have any money saved for retirement, and about half of those people aren’t getting a pension. Without any retirement savings, they will end up relying heavily on Social Security benefits—which were never meant to replace full retirement income.

Rather than stay in that bear den and hope your retirement fund grows on its own, get proactive and save, save, save—whether you are just entering the workforce or see retirement in the near future. One way to grow your IRA is to open a self-directed retirement plan and include alternative assets you already know and understand. For example, do you already invest in real estate? Do you trade in commodities such livestock or agricultural products, or natural resources? Are precious metals already adding shine to your investment holdings? You can include all of these and more in a self-directed retirement plan, and build a more diverse portfolio that is potentially more lucrative.

You can read more here about self-direction to see if it’s right for you. If you are a younger worker with many years ahead of you before you retire, now is the time to open and fund a retirement plan, whether Traditional or Roth; you may even be able to self-direct your workplace 401(k) plan (ask your employer about that) and go from savings that are not enough to just right—and then some.

Have a question about self-directed IRAs? Give our helpful professionals a call at 888.857.8058 or send an email to Info@NextGenerationTrust.com. We’ll give you the answers that are just right to help you get started.