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Whoa … Wait, Where are Younger Workers Investing for Retirement?

Published on June 7, 2016

A new Harris poll* revealed that a large majority of millennials—almost 80 percent—don’t have stock market investments. Many (more than 40 percent) cited perceived lack of funds, about 24 percent said they don’t know how to make these investments, and 13 percent said student debt was to blame.

There were some gender differences around investing in stocks as well. 75 percent of women said it was confusing as well as  foreign (as opposed to 60 percent of their male counterparts) and 60 percent of women also saw the typical investor as “an old white man.” About half of the men who participated agreed with that assessment.

financial-literacySo what about those young workers who are earning but not investing? With their enviably long investing time horizon, they should get busy building up their retirement savings. If they want to avoid the stock market for whatever reason, there are still plenty of ways to grow a healthy retirement nest egg. Self-directed retirement plans offer investors greater freedom around the types of assets they want to include in their portfolios, so no one has to be “stuck” with stocks, bonds or mutual funds if that’s not their thing.

This younger generation was also coming of age during the Great Recession, and saw their parents’ stock portfolios take a major hit (and let’s not forget the first downhill slide of the century, after 9/11/2001) so they have reasons to be wary.

So if they’re not into stocks, what about self-directed alternative assets in a retirement plan instead?

See if self-direction is the  path for you to follow for your retirement 

Self-direction can be a great strategy for investment self-starters. For one thing, you can choose from a wide variety of investments—the types of assets you already might be investing in outside of your retirement plan. You can include these assets in a self-directed plan and enjoy all the same tax advantages of regular plans, with the benefit of making your own investment decisions.

  1. Find out if your workplace 401(k) plan can be self-directed. It’s up to the plan administrator but if this is possible, you can build a more aggressive nest egg with what you already know and understand.shutterstock_70970371
  2. Open your own self-directed IRA. Our Starter Kits have everything you need.
  3. Research what is possible, and how to make the investment. For example, do you want to own rental property? Want to invest in that restaurant that’s opening? How about shares in a rubber tree plantation? As a self-directed investor, you can make these investments within your plan. It’s up to you to research and thoroughly understand the “what” and “how” of each investment, and work out the terms.
  4. You make your own investment decisions; we handle the rest. The self-directed IRA administrator (like Next Generation Trust Services) will execute the transaction based on your instructions, handle all the mandatory paperwork and reporting, and any other activities associated with account administration.

Younger investors have decades ahead of them to build up retirement wealth. And, with a self-directed Roth IRA, they can continue to add to the plan after age 70-1/2 (it sounds so far off but it’s always good to plan ahead). You can read more about the different types of plans, annual contribution limits, and more on our website. You can also contact our helpful self-direction professionals at Info@NextGenerationTrust.com or 888.857. 8058; we’re here to answer your questions as well as ensure you are investing within IRS guidelines.

*The online survey polled 2,093 Americans aged 18 through 34 in March 2016.

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