Self-Directed IRA

Here’s How to Tell Whether You Are Saving Enough for Retirement with a Self-Directed IRA

How do you know when you have saved enough for retirement? How do you know if your current monthly contributions to retirement accounts like a Self-Directed IRA are enough? Are you on track? Lagging behind? Putting too much away? These questions can introduce a great deal of uncertainty into your retirement planning process, which is why the most important thing is to give yourself clarity. Here’s how to tell whether you are saving enough.

Step One: Determine Your Self-Directed IRA Goals

The first step for gaining clarity is to decide what it is that you want in retirement. Some people only have a vague notion of what retirement will look like for them. They figure that “I just need enough money, and I’ll be happy.” But they do not stop to think about what might be enough money for them.

Determine your Self-Directed IRA goals by considering how you want your retirement to look. The AARP’s retirement calculator asks key questions here, such as what kind of lifestyle you currently enjoy, your marital status, and your salary and savings rate. It’s a good idea to complete calculators like these—not necessarily to take their word as absolute, but to use them for guidance.

In the AARP retirement calculator, you will have to consider the following:

  • Your desired age for retirement. Retirement is not just about one number, after all. Sure, the amount of money in your accounts is vital, but you also have to know when you want to retire. The question of when may shape your retirement decisions. For instance, you will be required to take out RMDs—required minimum distributions—from some retirement accounts upon turning the age of 70 ½.
  • Your income. Is your income static? Likely not. You may switch jobs in the future; you may even start a new career. Whatever happens, the trend for most people is that as they build their skills and their connections over the years, their salary increases as well. But that does not mean you should count on new income for retirement. Even if you are in your 20s, it’s time to consider starting saving a little bit of your income to take advantage of compounding returns.

Once you know what kind of lifestyle you can afford (by looking at your income and expenditure) and the age at which you want to retire, you will have a far clearer picture of what you might need to spend come retirement. This will give you an outline for approaching retirement with more clarity; but it’s not the only step.

Step Two: Suit Your Strategy to the Goal

Let’s say that you want to build a sizeable income for retirement, but you do not necessarily want that income to come from draining your funds. What should you do?

In such a case, you might consider investing in something like real estate or dividend-producing stocks. These can generate passive income that you can continue to enjoy, even deep into retirement.

The key here is to suit your strategy to the goal. Understand how you want your retirement to look and structure a strategy that will meet that goal. You do not have to achieve this goal overnight; this is, after all, retirement planning we are talking about. But keep in mind that you may want to consider self-direction as an option to help facilitate a unique retirement goal.

Finally, look at your monthly budget. At your current rate of savings (using a calculator like that from AARP), are you on track? You may need adjustment. Continue to adjust and give yourself yearly retirement checkups to make sure you are on course.

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