How a Self-Directed IRA Helps Millennials Retire Sooner

“Retirement? I cannot even pay off my student loans!” We get it. However, there is a process to it, and starting a Self-Directed IRA sooner rather than later puts you on the way.

You have your monthly mortgage or rent to worry about along with paying back student loans, healthcare costs, and sometimes just making ends meet.

Whether you are employed or work for yourself, chances are you have started an IRA or 401K. Ideally, your employer also contributes a percentage of your pay to your plan as a benefit of working for them. You elect to contribute a small percentage of your pay as well.

At this point in time, your retirement planning consists of, if you have time, opening your monthly statement and seeing a bunch of numbers and percentages on a chart. You struggle to find that number at the bottom of the third page that you think tells you how much you have saved up thus far. It looks like your money will add up and that 30 to 40 years from now you might have enough to be able to retire.

It does not have to be that way. By converting to (or starting) a Self-Directed IRA, you can take control over your retirement possibilities.

If you are knowledgeable about your current “plan”, you often need to research the various funding options your current plan makes available to you and read through pages of growth and pie charts in order to make a decision.

What this means is that you are being asked to take your valuable time to make what is really an uninformed decision about something that may not impact you for many years.

The companies that “manage” these IRA and 401K plans make their money by charging employers service fees for “managing” all of these accounts. The opportunities they present for investing are usually limited to those entities the management company does business with or has a financial relationship with.

On the other hand, starting your own Self-Directed IRA allows you to freely choose your investing decisions.

Now think about how many people you know that do not own a home and are paying rent every month. The amount of rent they (or you) pay each month is based on a number of cost factors.

Suppose a landlord charging your friend $1,000 per month winds up with $75 per month “profit” after their mortgage cost, property tax, maintenance, janitorial service, garbage removal, redecorating, and property management costs. Suppose this landlord owns a 10 unit apartment building. That would make their “profit” $750 per month.

Chances are that your current IRA or 401K plan is not generating $750 per month (or $9,000 per year) for you at this early stage. Even if you have $100,000 in your account, a $9,000 annual contribution equates to 9%. It does not take very long to verify that your current plan is not producing at a 9% rate for you.

With that in mind, suppose you have a Self-Directed IRA instead. Among the capabilities it provides is an ability to invest in real estate at any time. This means that you could purchase or partner in the purchase of an apartment building or any other form of rental property.

Using your friend’s apartment above as an example, doing this under your own Self-Directed IRA could be contributing some or all of that $750 per month “profit” to your fund every month, and it is tax free.

It takes your personal time to find either a partner or the right investment property to purchase. Think of which is more worth your while. You could spend time each month trying to interpret your current IRA or 401K statement and making fast decisions about your 2% gain. Or, you could spend that time next month toward purchasing the best real estate opportunity to grow your Self-Directed IRA as quickly as possible.

Thinking long term, you could use your monthly profits toward investing in additional properties which generate rental profits and grow your own empire.

Suppose that you start your Self-Directed IRA now, and that ten years from now, your rental properties combine to be valued at $700,000. By then, your debt is paid off or close to it. You could then either keep growing your portfolio or you could sell it and retire.

That is ten years from now. Not thirty. The choice could be yours.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at

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