Self-Directed IRA

IRA Balances -Reach Record High: Here’s How to Diversify Using IRAs

Good news: Fidelity Investments is reporting greater-than-ever numbers of 401(k) and IRA millionaires. That is, investors whose Self-Directed IRAs or 401(k) balances have risen to $1 million or more.

The number is actually up sharply, from 133,800 at the end of 2018 to 180,000 today.

Overall, the average American with retirement savings has more than $307,600 saved up between workplace retirement plans and IRAs.  That’s up 9% from the end of the 2018, again thanks to continued stock market gains.

What’s behind the gains? Three factors:

First, a strong economy is enabling Americans to contribute more to retirement accounts in general. The average 401(k) employee contribution amount hit $2,370, which represents a 15% increase over the prior year.

Second, employer matching contributions are up, too. Unemployment is the lowest it’s been in 50 years, which is forcing employers to sweeten their benefits package in order to recruit and retain quality employees. Q1 2018 saw the average 401(k) match reach 4.7% of salary – a record high.

Combined, employee contributions to retirement funds and employer matching contributions to 401(k)s resulted in an average total savings rate of 13.5% – also a record high.

We are seeing a parallel increase in 403(b) participation, as well: Employees covered by these retirement plans, popular among tax-exempt and government organizations, increased to $1,700 in the first quarter, while the average employer contribution increased to $1,453.

Most experts recommend saving at least 15 percent of your income for retirement. Meanwhile, Fidelity rolled out a “retirement roadmap” that makes a lot of sense to us, which we profiled in our recent post “How Much Should You Have Saved By Now?”

The latest Fidelity release did not break results out by age, but here is a suggested set of guideposts that may help you assess your progress toward your retirement goals:

Fidelity’s savings “targets” are as follows:

  • Save your income by age 30.
  • Save 2x your income by 35.
  • Save 3x your income by 40.
  • Save 4x your income by 45.
  • Save 6x your income by 50.
  • Save 7x your income by 55.
  • Save 8x your income by 60.
  • Save 10x your income by age 67.

Using Self-Directed IRAs to hedge risk

However, investing to meet these targets could soon become a lot trickier than it has been over the last decade. Years of bull markets indicate that prices are up. And increased 401(k) participation rates also tell us that market sentiment is up, too. Both indicators point to a higher level of risk and uncertainty going forward than we saw even just a couple of years ago.

As the rank and file pile into stock funds in their 401(k)s and IRAs, many smart investors are turning to Self-Directed IRAs that allow them to pull money out of an increasingly precarious stock market, and invest it in assets that have little or no correlation with the stock market.

These are assets that have historically borne up better in slowing economies and in bear markets than stocks, and include the following asset classes:

  • Direct ownership of rental real estate – especially residential.
  • Tax liens and certificates
  • Gold and precious metals
  • Mortgage lending
  • Private lending
  • Farms and Ranches
  • LLCs and closely held corporations
  • Partnerships
  • Oil and gas
  • Private equity

Most investment company reps won’t tell you about these opportunities. They do not pay a commission to your average hometown financial advisor. But they are very real opportunities, and frequently sell at a steep discount compared to publicly-traded funds and securities – increasing long-term returns.

A Self-Directed IRA, 401(k), SEP or SIMPLE account allows investors more opportunities to diversify into alternative asset classes. American IRA allows them to take direct control of their assets without paying high AUM, expense ratios or wrap fees to third-party financial advisors, brokers or Wall Street firms.

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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