A Self-Directed IRA is one approach to retirement. And it is clear that not everyone chooses a Self-Directed IRA. But what do today’s retirement statistics say about what people should do to retire? And how might those statistics indicate a need for a Self-Directed IRA? Let us take a look at the recent numbers to see what we can learn.
Statistic #1: Retirement Savings
Ask yourself how many people have retirement savings. It would have to be a large portion of the workforce, right? The vast majority of anyone with a job? As it turns out, the number is distressingly low. Some one-third of Americans don’t have any retirement savings at all.
This statistic highlights the need for individuals to get started, even if they are not quite sure what they have planned for retirement just yet. Getting started is not only one of the most important ways for people to break out of the momentum of doing nothing, but it’s the best way for them to feel the encouragement that comes with seeing their wealth grow.
What is important to note about this statistic is that it does not indicate how many people have substantial retirement savings. Many of the people who do not count in the one-third may also be drastically under-funded for retirement. And that means that people should be considering all sorts of strategies to get themselves caught up in terms of savings.
Statistic #2: Retirement Lasts a Long Time
We like to think of retirement as the sunset years. But how long does a sunset really last? Not as long as retirement. As Investopedia points out, one big problem that many people run into is that they don’t anticipate just how long retirement might last. For many people—such as someone who retires at 65 and passes away at 85—it can last decade upon decade. That requires a substantial retirement nest egg if you are going to continue to live independently and comfortably.
Says Investopedia: “A 65-year-old woman has a 50% chance of making it to age 86.5, and a 65-year-old man has a 50% chance of reaching age 84 (as of April 1, 2020).”
Are you willing to flip a coin over that? If not, then you understand just how serious the situation can be. There can be a very strong likelihood that if you do not save enough for retirement, that you are going to outlive your money.
At American IRA, we often point out that many people can use “catch-up” contributions as they build their retirement nest egg. That is why it is important to consider all of the options available.
Statistic #3: Social Security is…Iffy
Says Investopedia: “In 2020, the average monthly Social Security benefit was only $1,503, which comes out to $18,036 per year.” Does that sound like a good retirement in 2020 to you?
For many people, social security is merely a supplement to a well-planned retirement fund. That is the ideal situation to be in when you have a substantial retirement fund available and can draw on social security without needing it.
But that kind of wealth does not happen by accident. Retirement takes planning, work, and consistent effort over time. It also takes the right access to the investment assets that make the most sense to you.
For people with Self-Directed IRAs, this independent style of investing can be a great way to build retirement wealth. It means retirement security that includes diversified assets—which means more confidence as you age.