The pandemic has caused significant health and financial issues over the past two years. True to form, the stock market has played its typical part of rising and falling during this period of economic uncertainty and rising inflation. If your retirement plan has suffered or if you are in the beginning stages of retirement planning, check out these tips that can help you build retirement wealth the right way. Implementing some or all these strategies can help you get on and stay on the right track to retire well.
7 Ways to Build Retirement Wealth
- Identify your magic number for retirement. You can calculate your financial freedom number that shows how much income you need to retire the way you desire. Once you do this, the real work begins.
- Create your budget and start saving now. Once you know your magic number, define ways you can save on current expenses and put those extra savings in a retirement account. Trim any extra spending on things you don’t need such as dining out often, shopping for clothes or other items you don’t really need. Don’t go on lavish vacations for a year or two. You can even consider downsizing your current home, which can create extra saving potential. The key is to practice spending money on things you need and don’t purchase your “wants” until you have established a healthy nest egg and accumulated the extra funding within your budget to splurge.
- Education is key. Evaluate your current financial status and determine where you stand. Part of this includes understanding your investments. If you don’t keep track of the market or know of different investment options that are out there, find an educated, trusted financial advisor to talk to.
- Take advantage of employer matching benefits for your retirement plan. This can significantly help your retirement planning efforts. If your employer matches contributions, they are giving you free money towards retirement. Why would you turn that down? If your employer doesn’t offer a plan, you can open an individual IRA.
- Self-employed without an employer-sponsored plan? Open an IRA or a solo 401(k) and start contributing. Make a commitment to maximize your annual contributions as much as you can, as often as you can.
- Diversify your portfolio. Wall Street is not always your friend, so, don’t put all of your hard-earned savings into the stock market. There are alternative investments to the stock market as we explain in number 7 below.
- Open a self-directed IRA to take control of your investing funds and decisions. Regardless of your current position, all of us should actively participate in our own retirement planning. The good news is that you can start NOW with investments in a self-directed IRA to make up lost ground and get yourself in good shape for retirement.
How to Build Wealth in a Self-Directed IRA
Those who self-direct their IRAs feel it’s important to invest in a variety of options besides stocks, bonds, and mutual funds. If your current broker doesn’t offer you the opportunity to expand your portfolio, reach out to someone who does. A self-directed IRA allows you the freedom to invest in alternative assets that can potentially earn a higher rate of interest than traditional methods. Alternative investments include gold, private lending, cryptocurrency, private equity, real estate and much more as part of your retirement planning strategy. Plus, you can self-direct other plans besides IRAs.
Types of self-directed savings plans
- Traditional and Roth IRAs for individuals
- Solo 401(k)s, SEP, and SIMPLE IRA plans for small business owners
- Education savings accounts (ESAs)
- Health savings accounts (HSAs)
BONUS: A health savings account can help you build significant tax-sheltered savings that can supplement your retirement income, too.
Our previous article explains how HSAs work to offset expenses when you retire so you don’t have to dip farther into your IRA funds to cover unexpected medical costs.
An Account with Advanta IRA Can Help You Build Retirement Wealth
It’s time to explore a wide world of options that can help you achieve diversity in your retirement portfolio. An account with Advanta IRA can help you build the retirement wealth you’re looking for.
As a self-directed retirement plan administrator, Advanta IRA is serious about enhancing our clients’ ability to save for retirement. Our clients diversify their portfolios with variety of options from an asset class called alternative investments. We have seen what happens when people put too much of their money into one type of investment. Our clients have seen it, too, and are savvy enough to know that diversity is key to their peace of mind and to help secure adequate retirement funds.
We are a trusted self-directed IRA administrator with years of experience in alternative investments, providing administration for almost $2 billion in client assets under management. Our clients invest in commercial and residential real estate, tax liens and deeds, cryptocurrency, private equity, and much more to grow wealth for retirement.
We offer free educational tools, webinars, and seminars on retirement planning to help others learn the power and flexibility self-directed plans present. And, we are always happy to discuss self-directed accounts with individuals seeking financial freedom in retirement.
This article was first published on May 23, 2018, and has been updated with current information to help you learn how to build retirement wealth the right way.
Contact Advanta IRA today to learn more.