How to Save for Retirement: Build Your Own Million-Dollar IRA

Are you one of the many Americans who are afraid you’re not saving enough for retirement? Are you even going to be able to retire at all? Are you seeking a solution on how to save for retirement and build a million-dollar IRA?

Well, rest assured you are not alone. Building a healthy retirement account is a problem for all of us; the Baby Boomers, Generation X-ers and could potentially affect Millennials as well as generations to come. Do you know why? You should, because defining your problem puts you one step closer to finding a solution. One step closer to the possibility of building yourself the retirement wealth you desire.

The retirement saving problems we all face 

Happy couple naps together in a hammock on the beachAbsence of diverse assets may prevent your account from building adequate wealth. Advanta IRA believes retirement account owners should seek ample diversity in their portfolios. For example, the average plan housed with conventional investment institutions depends on traditional assets like stocks, bonds and mutual funds to grow wealth. But, additional retirement income is achieved by investing in alternative assets such as real estate, private equity, private lending, and more. Learning how to save for retirement by holding different types of investments protects your wealth as some assets’ gains can offset the losses of others, increasing the potential to achieving a million-dollar IRA.

Lack of control over your retirement funds could be a major contributing factor missing in your savings strategy.

  • Do you know what your retirement account is investing in—and the returns those assets are gaining?
  • Are you able to achieve true diversity by investing in alternatives besides the typical Wall Street holdings?
  • Do you know you can take control and choose your own assets to reach your goals? Many people don’t know they can—but having this knowledge could be the key to your success.

Additional problems are outlined in the 17th Annual Transamerica Retirement Survey, which reports that retirement confidence is rebounding since the Great Recession. But, they also state that confidence has reached a plateau. Many Americans are planning to work past retirement age to make ends meet and don’t have a back-up plan if life throws them a hardball. Some of their greatest fears are outliving their funds, facing a critical change in health, and not being able to afford rising health care costs in general. 

Add to that the demise of sufficient Social Security benefits and the cost of living (hello, inflation!) combined with a stock market that can be wildly successful one moment and fiercely brutal the next—and it is plain to see how the average American is uneasy when thinking of how to save for retirement. 

However, Transamerica’s survey also found:

  • 77 percent of workers participate in either an employer-sponsored or individual retirement plan.
  • Two-thirds of those surveyed feel they don’t know as much as they should about investing for retirement and desire more information and guidance from their company regarding how they can reach their goals.

So, the good news is, people are saving for retirement. The question is, will they be able to save enough? Dave Ramsey published an article explaining how he thinks you can. We think you can, too.

And, the fact that many individuals realize they don’t know as much as they should about investing for retirement and want more direction is exceptionally telling. 

Does this describe you? Are you interested in learning how you can build enough income to retire? Do you want to know more about how your funds are invested? Do you want more control over what investments your IRA can acquire to build a healthy nest egg? Because we are here to tell you, you do have options and you can take action.

Develop your retirement savings strategy

  1. Set goals and open a retirement account. A solid savings strategy includes goals and budgeting so you can consistently contribute to your plan.
  2. Know how your funds are invested. Your retirement plan does not have to be limited to investing only in the traditional stock, bond, or mutual fund. In fact, if you have the desire of accumulating a million-dollar IRA, diversification can help you achieve that goal.
  3. There are options available besides the typical retirement plan housed with a bank or investment broker who chooses investments for you. These are common plans, but there is a retirement plan structure available that you may be unaware of, but which can facilitate your financial goals for your future.

Knowledge is your power, after all. And, discovering alternative ways of saving for retirement can help you achieve your goal to retire in comfort, on your own terms. Use Bankrate’s handy retirement calculator to find out how much you need to save and read on.

Introducing a solution: self-directed retirement plans

Self-directed retirement plans are no different than any other retirement account except for one critical element: you choose the investments, not your advisor or broker. A self-directed IRA gives you access to a plethora of alternative investing options to achieve diversity. You also have the control of choosing those you feel will help build wealth for your future.

Who benefits from using a self-directed IRA?

Ask yourself these questions:

  • Would you like more diversity in your portfolio and the freedom to invest beyond the shaky ground Wall Street is built upon?
  • Can you imagine having a hands-on approach in building your own retirement wealth by being able to invest in what you know best?
  • Do you want to put your own knowledge and expertise to work to choose alternative assets that you personally know and understand instead of being restricted to stocks and bonds? (Did you even know that you could do this?)
  • How would you like a nearly limitless list of alternative investments at your fingertips, such as real estate, private equity, notes and mortgages, forex, and much more?

If your answer is “yes” to any or all of the questions above, then you would benefit by using a self-directed IRA. Every bit of this is available to you, is entirely within your reach, and is exactly why a growing number of people use self-directed IRAs and similar plans. 

What is exciting is that anyone can take advantage of the benefits these plans offer. Realtors and builders can use their expertise to participate in real estate investments. Those familiar with rental property can run those investments through their IRAs. Capital fundraisers, individuals who are savvy in the futures and forex trading world, private lenders, financial, and tax professionals can all draw on their knowledge and invest using self-directed retirement funds to help secure their own successful futures.

Why do people use self-directed retirement plans?

Regardless of their backgrounds, consumers who self-direct enjoy the flexibility of choosing their own investments in areas they are familiar with—at a comfortable pace that they can control.

They have no desire to be married to Wall Street. They seek diversity in their portfolios through alternative investments that can sometimes build wealth at a faster pace than traditional investing vehicles do.

For example, if you enjoy rehabbing and flipping homes—you can use that experience to build income in your IRA. Investment property is purchased using self-directed retirement plan funds, and your IRA owns that property. After it sells and assuming you made a profit, instead of acquiring immediate, personal income, your IRA scores the earnings, which are directly deposited into the account on a tax-sheltered basis. Depending on the time it took you to renovate and sell the property and the gains you made doing so, you may realize a greater profit in a shorter amount of time than you might achieve on a stock or a bond.

Alternative assets are not limited just to real estate, although that is the most popular investment in a self-directed account. The biggest draw of those using self-directed plans is that their choices are almost endless. The only restriction is that you can’t invest in life insurance contracts or collectibles as defined by IRC 4975Investing with retirement funds also allows you to avoid capital gains and taxes that would be imposed on your personal income. This maneuver allows that capital to build in your IRA, providing more cash to invest in additional assets to continue growing income for retirement.

Permissible alternative investments in an IRA include:

  • Real estate (residential, commercial, land, tax liens and deeds, foreign land)
  • Private lending (mortgages and notes)
  • Private equity and private stock
  • Single-member LLCs (checkbook control IRAs)
  • Futures and foreign exchange trading
  • Timberland and farm land
  • Oil, gas, and mineral rights
  • Cattle, race horses, alpaca farms and more (no joke)
  • Crowdfunding options
  • Hedge funds
  • …and so much more

And, this is how you have the potential to build yourself a million dollar IRA. You have the advantage of capitalizing on your own knowledge to succeed in a realm that you’ve already mastered. You also have the ability to learn about additional alternative investments that can boost the earnings in your account. Income grows tax-free in your IRA, and the benefits of compound interest over time become your greatest resource.

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What are the different types of self-directed IRA plans available?

Most consumers are familiar with traditional and Roth IRAs. These are popular self-directed plans that offer excellent benefits for saving.

Small business owners most often choose and self-direct SEP and SIMPLE IRAs or 401(k)s. These are affordable, low maintenance, and can attract long-term employees seeking benefits in a working world where these benefits are few and far between. The annual contribution limits are also higher for these plan types than for the traditional and Roth IRA.

Self-directed education savings accounts (ESAs) allow individuals and families to choose their own assets to build tax-sheltered cash for qualified education costs.

Of particular interest to those who want to retire on their own terms are self-directed health savings plans (HSAs). Facing a world of rising health care costs, contemplating medical hardships that come with age, and having to live on a fixed income when they retire—many are choosing to use health savings plans to supplement their retirement income. If an emergency arises, withdrawals can be taken from that plan instead of the retirement account to pay for qualified medical expenses.

When should you start self-directing your retirement plan?

Today. Right now. And, no one is suggesting you ditch all traditional assets in favor of alternatives. Diversity is crucial to the success of any investing portfolio. And it takes time along with a bit of patience to build a healthy retirement account.

Self-direction is a powerful gateway to become actively involved in your investing decisions. When you self-direct, you’re in total control. You stop relying on retirement plan brokers to invest your funds for you. You stop cringing every time the stock market dips because self-directed accounts allow many diverse assets that can help you protect your hard-earned wealth should one investment or another prove unfruitful.

You put the power of choosing those assets into your own hands to earn tax-sheltered retirement income. By doing so, you give yourself the absolute freedom to invest in things you personally know and understand. After all, who is better to make these life-changing decisions about your life—than you? And, what is a better time to start than today?

Where can you find a trusted self-directed IRA services?

Choosing a reputable self-directed plan administrator is also essential and should be top on your list of priorities when considering self-directed retirement plans. Not every administrator allows all alternative assets in plans they offer. Make sure the administrator you choose permits the types of investments you are interested in.

Advanta IRA is a self-directed retirement plan administrator serving clients across the nation who hold over $800 million in assets. We allow our clients to use every alternative asset available to grow income in their accounts.

Our goal and commitment is to educate you about the benefits and rules of self-direction, which in turn empowers you to make critical investing decisions. To accomplish this, we offer free seminars and webinars about self-directed plans and various alternative investments. We employ an unmatched concierge-style service to each of our clients. We do this by developing personal yet professional relationships that allow us to fully understand your unique situation and aspirations.

Most importantly, Advanta IRA ensures the details of the administration of accounts we serve are in compliant with IRS rules and regulations. This includes filing reports on your behalf and helping you follow contribution limits and permissible transaction guidelines. Our taking care of this process allows you to focus on the most important task of identifying promising investments to build wealth for your retirement.

If you have questions about this article or if you simply wish to learn about self-directed retirement plans, contact us for a free consultation today.

About Scott Maurer

Scott Maurer, Vice President of Sales for Advanta IRA, is a recognized expert in the field of self-directed IRAs. With a law degree from the University of Florida and as a designated Certified IRA Services Professional (CISP), Scott’s keen understanding of rules and regulations fuels his passion to educate others on the power of investing in alternative assets using self-directed IRAs. Scott is a frequent guest on retirement and investing webinars and podcasts, and he has shown thousands of individuals how to achieve financial freedom by teaching them how to use their retirement funds to invest in private placements, real estate, private lending, and more. Throughout his two decades in the industry, he has watched numerous unique investments unfold, giving him great perspective of what is possible when people take control of their retirement funds and investing decisions.