If there’s one thing that matters to me more than anything else, it’s the people in my life—my family, my friends, my coworkers, and the rest of the wonderful people that keep me motivated and have made me who I am today. For my family especially, I strive to do my best to ensure that they’ll have a better future. And looking at the recent analysis from asset management giant Fidelity Investments, I’m not alone.
According to the analysis, folks are putting more money than ever into their retirement accounts. As Fox Business reported on Aug 19, 2021, “Fidelity said… that the average 401(k) balance increased to $129,300 for the [second quarter of 2021], a 4% increase from the previous quarter and up 24% from a year ago, according to the nation’s leading IRA provider.”
In fact, the Fidelity analysis found that the average IRA balance, 401(k) balance, and 403(b) balance were all up more than 20% versus 2020, leading Fox Business to broadly state that “the average balance in Americans’ retirement account hit a record for the third straight quarter.”
And it doesn’t end there. According to a September 10, 2021, article by Forbes, the Biden administration’s $3.5 trillion budget reconciliation package includes language that, “starting in 2023, employers with five or more employees would have to offer a retirement plan and automatically enroll employees, diverting 6% of their pay to a retirement account.” Employees would then get to choose whether to participate and could opt-out if desired.
Hearing that Americans are saving more than ever for retirement fills me with a great sense of joy. More money in American retirement accounts means a brighter future for our nation, and more people working hard to build a better life for those they love. But with that joy came an underlying degree of concern: are these Americans getting all of the information needed to make the right decisions for their unique financial situation?
If You’re Putting More Money into Retirement, Don’t Forget to Diversify
According to Kevin Barry, Fidelity’s workplace investing president, “The pandemic is clearly fueling a shift in how Americans prioritize their work, health, personal lives and financial well-being, so it’s encouraging to see a continued improvement of retirement savings rates and individuals expressing more feelings of hope and fewer feelings of stress.” I agree that the news is encouraging, but I also hope that these individuals understand that there are many, many options when it comes to building a retirement portfolio.
For example, a Roth IRA provides tax-free distributions down the road, which could be helpful depending on your expected tax bracket during retirement. There are also a wide variety of assets to choose from when building a portfolio, including alternative assets like real estate, cryptocurrency, and precious metals.
Mostly, though, I hope that those who are increasing their contributions understand all of the options open to them. Regardless of your level of risk tolerance, diversification is an important tool in helping mitigate your portfolio’s overall exposure, and knowing that you can expand your portfolio beyond paper-based assets like stocks and bonds could help protect your retirement from events like the Great Recession or the market turmoil of the last two years.
No matter how much risk you’re willing to take on, I want to make sure you’re aware of your options beyond stocks and bonds.
In addition to contributing more to their retirement accounts, more Americans are making catch-up contributions.
According to Fox Business, “Baby Boomers—some of whom are already in their retirement years, with others preparing for entry—in particular are making striking contributions to their retirement accounts with 58% of them allocating the maximum catch-up contribution of $6,500 in the fourth quarter of 2020” (catch up contributions are extra contributions allowed for those aged 50 and over). To me, this is more good news. No matter when you contribute to your retirement, you’re helping build a more comfortable future for yourself and your loved ones. But again, I can’t help but wonder if those making these catch-up contributions are aware of all their options.
For example, did you know that you can have an IRA or Roth IRA made up partially or entirely of alternative assets? These are known as self-directed IRAs, which allow you to expand your diversification to assets and asset classes not commonly available through conventional IRAs or Roth IRAs.
One of the most popular examples of a self-directed IRA is a gold or precious metals IRA, which allows you to protect your retirement with physical precious metals. That’s perhaps the most important benefit of a self-directed IRA—total control over your asset mix, which allows you to build a retirement portfolio uniquely suited to your situation. Self-directed IRAs are an option that every American should be aware of when building their retirement portfolio.
How you build your retirement portfolio should be up to you. But building the right portfolio is only possible when you know all of the options available to you.
U.S. Money Reserve can help you protect your retirement with precious metals.
If you’re one of the many Americans looking to grow and diversify your retirement portfolio, U.S. Money Reserve can help. With 20 years of experience helping individuals build their portfolios with precious metals, and with the ability to help you establish and build a self-directed precious metals IRA, we’re ready and willing to help you work towards a more comfortable retirement and build a golden legacy for future generations.
I love hearing that America is breaking records when it comes to saving for retirement. There are few things as important as our and our family’s futures, and so it’s pivotal that we take great care in making the best, and most informed, decisions for those futures as possible.