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Retirement Planning and Savings Guide for Seniors Leveraging a Self-Directed IRA and Alternative Investments

Written by: Daniel Gleich

Employing a Self-Directed IRA as a tool for your retirement planning can bring tax advantages to your incoming revenue, and assist in diversifying your overall retirement portfolio.

For many, retirement is something to look forward to after years of employment. People often see it as a new chapter in their lives and a time to enjoy the freedom that comes from permanently leaving their job. As exciting as it may be, though, it can also be stressful. Before retiring, one should give it careful thought and create a plan that will help ensure that it's an enjoyable experience. Saving for retirement early on in one’s career through a Self-Directed IRA or a similar tax-advantaged retirement account is a great way to plan for the future and alleviate the financial stress of that big lifestyle shift. Self-Directed IRAs allow those saving for retirement to diversify their financial portfolios and have a greater level of control over what their funds are invested in.

To start, people should figure out what their retirement goals are early on. Having a goal helps to determine what one's ideal retirement lifestyle looks like and what is needed to achieve that lifestyle. Seniors whose goal is to see more of the world, for example, may choose a lifestyle of travel. Another person's goal may be to pursue a passion and start their own business or live a quieter life away from busy cities.

Regardless of your goal, there is a SDIRA to help you achieve it. Investing with a Self-Directed Gold IRA is one way that investors can put their money to work outside of the stock market. Gold has a history of withstanding stock market downturns and, for that reason, may be an attractive investment.

Where a person lives after retiring plays a big role in their lifestyle. A retired individual or couple may want to move closer to family, to a new state, or even to a different country altogether. Family homes may feel too large or empty for retired couples, and seniors may find living in a smaller home less expensive and less work in terms of upkeep. But for others, particularly those who have paid off their mortgages, moving may not even be a factor.

Some may choose to use a Self-Directed Real Estate IRA to invest in real estate that will support them in their retirement goals. If this is done, it’s important to remember that one cannot live or work in the real estate that they’ve invested in; that goes against IRS rules. Real estate IRAs depend on the real estate market, and it’s important that investors do their due diligence and conduct research prior to making any investment.

One's health is a big consideration if contemplating a move during retirement. People in good health may look to active adult communities as an option. Unlike other neighborhoods, these communities include houses, apartments, and condos that are only for active seniors over a certain age. Independent living communities are yet another option. These communities offer services such as dining options, housekeeping services, and transportation services.

Deciding on a lifestyle, however, is just one step. People need to determine if they'll have enough income to live the life that they want and to reach their post-retirement goals. To start, they'll need to estimate what their income will be. Things to consider include Social Security benefits, 401(k)s, IRAs, and any other savings plans that may be in place. When you’re ready to draw from your Self-Directed IRA, a custodian can help carry out the administrative tasks needed. An IRA custodian takes directives from the account holder and invests their money accordingly. To help one make the most informed decisions regarding their SDIRA, people should also look at how their annual or monthly expenses, such as gas or other daily transportation costs, will decrease after retirement. New and increased expenses are another factor to consider; for example, an employer will no longer pay for health insurance premiums.

Once an estimated income is set, the next step is to estimate how much one will spend on housing, food, and other general expenses. People should also keep in mind that unexpected events and expenses may arise that take a toll on one's finances. Experts recommend setting aside enough to cover a minimum of three months' worth of expenses.

At this point, one should know whether their income will be enough to cover their retirement expenses and allow them to live the life they want. If the results aren't favorable, it may be necessary to look for additional sources of income or make adjustments to one's plan.

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