These are the years that the Baby Boomer generation have waited for their entire lives. They are retiring in droves, and are looking for new ways to increase and protect their retirement accounts to ensure they have a steady stream of cash for their future. To that end, the IRA and 401(k) are still the primary retirement vehicles for saving money in defined contribution accounts. The ability to roll over savings accumulated from the job is always the most attractive feature of an IRA account. Most people pre-retirement will plan to roll over their savings into an IRA, according to The Pew Charitable Trusts survey of people nearing retirement. Among those who have recently retired, fees don’t factor into the decision to roll over money into their IRA accounts.
Upon retirement, more people today want the same or similar tax advantages, prefer to consolidate their savings, and won’t usually leave their assets with the employer they retired from, that much hasn’t changed over the years. Retirees could do with more education regarding opportunities to work post retirement, or ways to keep their savings viable with better financial advice and more options for investing once they fully retire from their jobs.
The Pew Charitable Trusts survey also found that the most recent actual retirees are not as concerned with IRA fees, many do transfer savings to IRAs (46%), and the rest leave their savings in their employer’s plan at retirement after all (54%). By contrast, near retirees need more advice on how to manage their money at retirement, and only 16% will roll over to an IRA when prompted. For people with $30,000 or more in retirement funds, these numbers are only a small representation of all retirees in this country. There is too a big distinction between near retirees and those people who have actually retired from their jobs.
Some retirees may want to review self-directed IRAs (SDIRAs) to manage their long-term investing strategies. Last year, when the SECURE Act was legalized, there were new benefits available for retirees. People now have more time to save money with Required Minimum Distributions (RMDs) being less strict, with no age limit requirements or prohibiting adding savings to their IRAs after 70.5 years old. The SECURE Act also helps retirees by opening up employer plans to non-contract workers, giving small business owners incentives for promoting retirement savings in SDIRAs for their employees.
Other trends to watch include:
- Watching robust markets during the ongoing days of the pandemic
- Diversifying investing by talking to financial planners
- An increase in environmental, social and corporate governance (ESG) assets by investing in companies with your values to benefit society overall
- Becoming a savvier investor yourself, by investing in real estate, private equities, crowdfunding through an SDIRA