How to do a self-directed IRA self-assessment
Are you ready for retirement? Have you considered a self-directed IRA?
It is not a comfortable question for most people. They think it is too late in the game to start preparing. Or they think they don’t have enough money now be putting money aside in the future. Or they may not even know how to get started with a self-directed IRA, so they put it off and put it off and put it off until they think it will be too late to do anything for retirement.
Let’s fix all that.
It begins with an assessment of where you are currently in your retirement progress. Don’t worry – this doesn’t have to be a painful process. Instead, it can feel like a jolt of energy in how you develop a new retirement strategy. If you ask us, it’s an exciting prospect to finally take charge of your financial destiny. Let’s handle it all with a self-assessment retirement.
First things first: self-assessment
The first step in evaluating your ability to retire is to examine what you already own. Do you already have an IRA? A 401 (k) at work? Take out a sheet of paper and write down the values of those accounts so you know what kinds of assets you already have on hand.
You must also consider other assets. For example, do you own real estate? Owning your own home is the kind of information that will be critical to understanding your situation in retirement – your home is an asset like any other. Other real estate should also be accounted for and tabulated, even if you don’t necessarily plan for this real estate to be part of your retirement “savings reserve” for now.
Try writing this on a piece of paper with a pen; it’s a good way to organize your thoughts, and limiting yourself to having just one sheet of paper to write on will help keep things simple and easy to read.
Evaluate your retirement goals
Now, start a new sheet of paper and try to think not in the present, but with your future goals in mind. For example, what kind of lifestyle will you want when you retire? How much investment money will you have to have to guarantee an income that will cover property taxes, basic bills, medical expenses, and more?
It may seem like a hypothetical situation rather than an appraisal, but these numbers will be incredibly important as you move into retirement.
Create a list of possible strategies
Now is the time to connect the dots.
You may notice a difference between how much you currently saved for retirement and your goals. In that case, you should think about being more proactive in saving money. You will also have to think about your ROI. If you need a higher overall ROI than traditional IRA investments typically provide, you may want to consider a self-directed IRA. Self-directed IRAs give you more options for portfolio diversification, such as investing in real estate or intellectual property. And since self-directed IRAs are just that, self-directed, you can often save on money management fees, giving you more money to spend on your retirement goals.