Investors need every break they can get and tax advantaged Self-Directed IRAs are an important part of that formula.
It’s not easy these days to amass a nest egg sufficient to provide for real retirement security. A long period of stubbornly low interest rates has resulted in reduced returns on investments, lower dividends and lower income available from annuities and other traditional income-generators.
- Don’t forget health care expenses. For example, Medicare doesn’t mean “free health care.” You still have substantial deductibles to meet under Medicare Part A, unless you cover them with Medigap plans, Medicare Advantage, etc. You may also have at least some prescription drug expenses to consider, even if you have Part D or drug coverage within a Medicaid Advantage plan. Furthermore, consider the substantial cost of long term care coverage, including adult day care and skilled nursing home coverage. These types of facilities receive little or no coverage under Medicare. You’ll have to fund them out of pocket, or carry long-term care insurance.
- Avoid the scammers. Do your research and only invest with proven performers. If you use a Registered Representative, you can check out the disciplinary and enforcement records of your financial advisor with FINRA’s BrokerCheck.
- That doesn’t mean just holding assets in stocks, bonds and cash – though that’s a great start. You should also consider other asset classes that can accumulate tax advantaged profits within a Self-Directed IRA including real estate, gold and precious metals, foreign investments, direct ownership of property via a Real Estate IRA, tax liens and certificates and other out-of-the-box asset classes.
- Stay out of consumer debt. Yes, some debt can pay off – like debt for a lucrative degree that enables you to earn a better living and quickly pay off any student loan. But credit card debt, appliance loans, rental fees and most car notes will eat away at your choices and your eventual retirement security like a cancer.
- Take advantage of every tax-advantaged dollar you can contribute. That means making the most out of your IRA eligibility, 401(k) eligibility and other tax-advantaged retirement savings opportunities, to include a Self-Directed IRA and/or 401(k), SIMPLE or SEP component.
- Keep some assets in taxable accounts, as well. These assets allow you to tap them prior to age 59½ with no tax penalty, and also qualify for lower long-term capital gains rates if you hold them longer than a year. You can also practice tax loss harvesting strategies with these investments to further minimize your tax bill.
- Plan for a long life. Many people are living two or three decades into retirement now, and sometimes even longer. If you are married, the chance of at least one of you living into your 90s is very high. Plan accordingly by saving aggressively, and consider the role of permanent life insurance and life annuities in your portfolio.
- Speaking of Medicare, don’t miss your enrollment deadlines! You must enroll in Medicare during your open enrollment period, or face penalties. If you are turning 65 this year or next year, you should become very conversant with your options and requirements. Read up on open enrollment policies with the Center for Medicare and Medicaid Services
American IRA, LLC is a leading financial services company specializing in providing third party administrative services for Self-Directed IRAs and other retirement accounts. Our offices are in Asheville and Charlotte, North Carolina, but we cheerfully work with investors nationwide. To learn more about the benefits of self-directed retirement accounts, visit us at www.americanira.com, or call us today at 866-7500-IRA(472). We look forward to working with you!