Self-Directed Traditional IRA

Unconventional Retirement Strategies that Make a Huge Difference in Quality of Life

The road to retirement may not always be smooth. And it may not always be the same road. What works for one investor may not be the best set of tools for another—which is why it’s important to be open-minded to a range of strategies. One way to do that is by holding a Self-Directed IRA, which opens up retirement investments to all sorts of assets, from precious metals to private stock to tax liens and real estate. But there are other unconventional retirement strategies that are worth hearing about as well:

Geoarbitrage: Stretching the Value of a Dollar

For some people, retirement funding is all about the accumulation of more dollars. The more dollars you have, the closer you are to retirement. But others eschew this and think about the quality of their dollar. This leads to geoarbitrage: living overseas in low cost-of-living areas to maximize the value of their retirement nest egg.

The logic is simple. Using geoarbitrage, a retiree uses the value of their stronger dollars to fund retirement in a low cost-of-living area that trades in a different currency—usually one much weaker than the dollar. There are lots of other factors that should go into choosing a destination for retirement, including health care access and family concerns, but given a country with a solid infrastructure, geoarbitrage makes sense form a purely financial point of view.

The Traveling Retirement

It’s not all too unconventional on its surface: someone retires, purchases an RV, and then hits the road for the retirement trip of a lifetime. However, there are other ways in which people unconventionally add travel into their retirement plans—and sometimes, they even fit it into those plans.

For example, as Forbes notes, there are some who maintain a part-time job with delivery or truck driving to help fund retirement and satisfy the desire to travel and see the world.

Withdrawing a Fixed Amount from Savings

Here’s an unusual retirement strategy that does not require you drive a truck or move to some exotic location. According to Fidelity, keeping your savings withdrawals under a certain amount can have a dramatic impact on your retirement prospects. Usually, Fidelity argues, you’ll want to keep your savings withdrawal rate to about 4-5% of your net worth.

This is not so much an unconventional retirement strategy as it is an unconventional approach to the math. As Fidelity noted, those with a 4% withdrawal rate were often able to increase the value of their retirement nest egg over time. Yet for different withdrawal rates (assuming a starting date of age 65), money started to run out:

  • With an 8% withdrawal rate, a $500,000 portfolio went to nothing before the age of 75.
  • With a 6% withdrawal rate, that same portfolio went to nothing at about 81 or 82 years old.

Obviously, the lower your withdrawal rate, the more likely it was that your money would outlast your retirement. Yet it was the magic 4% number that saw retirement savings improve over time. The obvious conclusion: if you can save enough money to withdraw just 4% over the course of your retirement, you can essentially have perpetual financial freedom, assuming fixed costs.

Using a Self-Directed IRA for More Unconventional Strategies

Unconventional retirement strategies do not have to all be about unusual tricks or doing the math in your head. Sometimes, you might just invest in an unconventional asset class.

A Self-Directed IRA allows this. Not only will you be able to invest in retirement assets like real estate and private stock, but it opens up all sorts of long-term retirement investing possibilities. For more information, contact American IRA at 866-7500-IRA.

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