Experts say 10,000 people born between 1946 and 1964 are retiring every day. Baby boomers heading into retirement face a retirement crisis because of the shaky stock market and credit card debt. If you are searching for the best self-directed IRA for overcoming a retirement shortfall, consider a self-directed LLC with checkbook control. A truly self-directed IRA puts you in the driving seat so you don’t depend on the whims of a broker. Also, many people find the target-date funds in their 401(k) plans are not providing the kind of returns they desired. Instead of leaving your retirement future to chance, consider rolling money from a company-sponsored retirement account or a traditional IRA into a self-directed one.
Boosting your retirement income
Insufficient savings and unemployment in later years painted a gloomy picture for many baby boomers. For those who invest in real estate properties, the retirement future is brighter. The latest baby boomer retirement research shows many retirees deal with a retirement crisis because of insufficient retirement income. With rental income from rental properties, it’s easier to pay credit card debt, medial bills and other financial needs in the golden years of life. You can quickly bid on a real estate investment by using your self-directed IRA with checkbook control. Whether you choose real estate or an alternative investment, your goal is a better ROI (return on investment) compared to what you get with the stock market, bonds or traditional investments.
Making up for a lack of savings
A GoBankingRates study showed 30 percent of people over the age of 55 have no retirement savings. Meanwhile, 26 percent have less than $50,000. With a rental property, you could supplement insufficient retirement income from retirement accounts and social security. For the 26 percent of baby boomers with retirement balances greater than $200,000, some experts suggest rolling money into a self-directed IRA to buy a real estate property outright. Others suggest using part of the retirement income in a self-directed IRA as a down payment on a rental. With your self-directed IRA, you can make other bold investments as well such as limited liability companies, coins, foreign currencies, deeds, private businesses, foreclosures, and precious metals and tax liens.
Understanding past mistakes
In order to prevent a retirement crisis in the future, young people can learn from the financial mistakes of the older generation. Experts say real estate investing appeals to many people in their 30s and 40s noticing the retirement crisis. Some of the reasons for the retirement crisis for baby boomers include the stock market decline in 2008. Also, low-interest rates affected conservative investors. In addition, the average social security payment is just about $1,300.
Avoiding prohibited transactions
To avoid paying IRS penalties, make sure you use your self-directed IRA in the proper fashion. The best self-directed IRA is one that helps you understand and avoid prohibited transactions. For example, it’s important to avoid real estate purchases with close relatives. Also, you can’t buy a rental property with a self-directed IRA and then live in it yourself. As long as you play by the rules, you reap many of the tax benefits such as a deferral of capital gains.
More people today receive social security compared with 84 percent receiving benefits now compared to 69 percent in 1962. To overcome the retirement crisis, you can’t rely on social security income alone. By opening a self-directed IRA, you open up a new world of investment possibilities. To build wealth, choose a variety of investments rather than simply stocks and bonds.
At New Standard IRA, we help our clients set up the best self-directed IRA to meet their retirement needs. For more information on the retirement crisis, please contact us.