Why a Self-Directed Roth IRA is Smart for Millennials
Saving for retirement can be a challenge, especially if you are living paycheck to paycheck. Between student loan and credit card debt and stagnant wages, retirement may seem out of reach for the Millennial Generation.
But building a nest egg doesn’t have to be a major strain on your bank account.
You can start putting money aside using a self-directed Roth IRA. A Roth IRA is the perfect way to save for retirement even if you only have a little to spare.
If you want to start putting away funds for your golden years today, here are the top five reasons to invest in a self-directed Roth IRA.
1. Tax- Advantaged Investing
Opening a self-directed IRA can have huge tax-advantaged benefits. Whether you are looking at a traditional IRA or a Roth, either can help your savings long-term. As you make contributions to an SDIRA, your funds will grow over time.
While traditional IRAs have tax-deferred growth, the perk of using a Roth IRA is that all withdrawals at retirement are tax-free. All the taxes are paid up front. No matter how small your contribution, every little bit will help your nest egg grow. As your income increases, you can add more to the account.
Unlike a traditional IRA, you aren’t locked into required withdrawals or forced into contributing a certain amount. Traditional IRAs also tend to require more money. Roth IRAs are great way to start tax-advantaged savings with a lower salary.
2. No Minimum Contribution
Unlike other savings plans, there is no minimum required contribution for Roth IRAs. You can put in what you can afford and increase that amount over time. There’s no set rule binding you to an amount you can commit to. Additionally, your money is available to you should you need it.
There are certain situations that will allow you to withdraw money from your Roth IRA without suffering tax penalties. You can take that money tax-free as long as your situation fits the criteria. Also, if you wanted to let your account grow after reaching retirement, there’s no required minimum distribution.
3. Asset Protection
It can be difficult to save if you are worried about financial hardship, but by putting money in a Roth IRA, you are holding on to some of your hard-earned cash. If you are struggling financially, there’s no need to worry about your IRA contributions.
Your Roth IRA contributions are kept safe even if you are having money trouble. Even if you declare bankruptcy, your IRA is considered separate from your personal account. Life can be unpredictable; having a Roth IRA can protect your future.
4. Diversified Investing
A self-directed Roth IRA can open your investment opportunities. Beyond the typical stock, bonds, and mutual fund investments, self-directed IRAs have a whole new world of alternative assets to take advantage of. Instead of being tethered to the traditional avenues, you can try your hand at real estate investing, put your money into precious metals, tax liens, private loans, or even cryptocurrency.
While there are prohibited assets, the IRS is clear on what you cannot invest in, such as life insurance. You decide where to put your money, and it could be in more than one asset. With that added freedom, you can build a diverse portfolio to help your nest egg grow.
5. Control of your Future
Self-directed Roth IRAs are great because you have complete control over your financial future. You decide where to put your funds, how much, and when to make changes. As the owner of your Roth IRA, you can select your assets, build your portfolio, and decide where to invest your hard-earned money.
Putting your plan together can be as simple as doing the research and selecting the right alternative assets for your budget. With the assistance of a certified IRA custodian, you can design a plan to make your golden years as comfortable as possible.
Planning Ahead, Today
Saving for retirement doesn’t have to be a struggle. With the right tools, a little research, and a lot of planning, you can start building your nest egg today. Self-directed Roth IRAs are just the ticket to get you started on your terms.
As always, be sure to perform your due diligence before deciding if SDIRAs are right for you. You don’t have to put your future on hold because of today’s problems. Take the reins on your retirement plan! Talk to a trusted financial advisor today and start saving with a Roth IRA today.