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Find Out How to Protect Your Retirement Savings
The answer to the question "can I retire at 60 with $500k" can be a question that is complex to answer. Retirement is complicated to plan for because it can last, on average, from 20 to 30 years. When planning your finances for retirement, many variables can change over the years.
The average life expectancy for men in the USA is 77 years; for women, 81 years; however, the oldest person in the USA lived to 115 years. If this were you, and you retired at 60, would your retirement savings last for another 55 years? You Would have to live off a little over $9k a year. For many people living off $9k a year would be impossible today. When you consider inflation would make $9k a year practically worthless in 55 years, you would probably say, no, I cannot afford to retire at 60 with a retirement savings pot of $500k.
It is likely that we will live to 115.
If you are asking this question, there are a few things you need to consider before you can determine whether it is possible to retire at age 60 with $500k.
First, if you are not already 60 and have $500k, you need to work out how you will get to this milestone.
If you are approaching 60 and already have your $500k saved, you need to look at how that savings pot might grow and what pressures might be borne on this retirement fund.
Now let's consider inflation rates, or instead, consider inflation itself. Inflation can be tricky because although it can mean that the dollar's value decreases over time, prices always increase. An excellent way to determine if retiring at age 60 is possible with $500k would be to compare current inflation rates with historical rates and see what they are expected to be years later. Suppose inflation rates can be expected to stay the same and not outstrip interest rates over the next 30 years, and you can live comfortably within the annual income you will have, then yes. In that case, you could retire at age 60 with $500k. However, if such can't be expected, this can pose a problem.
Inflation is one of the most significant risks to retirement savings. The amount of goods and services you can buy with a certain amount of money decreases over time – making any money saved less valuable. Many things can contribute to inflation, such as a rise in oil prices or a weakening economy, which can lead to higher consumer spending on everyday items.
If we do a straightforward calculation and assume you will live to 80 and retire at 60, you would have 20 years of retirement to fund.
Your $500k pot would then have to be divided by 20 years, giving you an annual income of $25,000. How does that compare to your current income? But it would help if you still factor in risks and inflation.
Bearing in mind if you had $25,000 in 2002, today, 20 years later, you would need over $46,000 to have the same spending power as a result of inflation, you would need to receive interest at over 3% and not to have withdrawn any of your capital to achieve this growth. Historic inflation has had a vast impact on retirees spending power in the past, and we have no reason to think it will not have a similar effect in the future.
Check out some government websites and financial institutions offering interest rate calculators to determine how much your savings might grow. At the same time, they sit in your bank account, earning interest. As you draw down your retirement savings, the capital amount will decrease, and the actual amount the pot will grow will also decrease.
We have looked at how your saving might grow over time as you get interested in them and how inflation may erode the buying power of your savings, but what other risks could effect your retirement funds.
Other risks can erode the value of your retirement savings besides inflation. Pandemics can cause damage not just from illness but from loss of production too – primarily if you rely on people being able to work into their later life; look at how Covid-19 has impacted the US economy.
Global conflict can result in fewer countries trading and lower productivity. It can also cause mass migration that can lead to changes in the population and labour market – which can be bad for those living on their savings. We sit on a potential global war with Russia over Ukraine when writing this article.
Stock market crashes can wipe out people's years of careful savings within a few days, as can any natural disaster, such as earthquakes or floods.
Changes in the political landscape can change what types of tax you may have to pay and how much they might be. Please take a look at the proposal currently circulating from the Biden administration as just one example.
Of course, inflation is still a risk, and at the current time, inflation only seems to be heading in one direction, upwards!
Whether or not you can afford to retire at 60 with $500k, you should still consider a strategy to combat the risks highlighted above, particularly as all of these risks seem real and highly likely.
You can either do something about it now or wait until the wheels fall off the wagon... but there WILL come a time when there will be no choice but to change your investment/saving habits! And when that happens, if you haven't been proactive about diversifying your portfolio, you can kiss your retirement goodbye.
We would only recommend putting some of your eggs in one basket by having everything in paper assets (stocks, bonds or cash), as these types of paper assets are highly susceptible to the kinds of risks we have already highlighted in this article.
As part of a strategy to diversify your retirement savings, we recommend you consider investing part of your retirement savings in precious metals like gold, silver, platinum, and palladium.
Many people invest in gold and other precious metals to help protect their retirement funds and ensure they retire when they wish. Typically, when people invest in gold and other precious metals, we see them invest between 5%-35% of their portfolio in gold/silver/platinum or palladium. Most of these people opt for the highly tax-efficient gold IRA plan
1) Deflation can spell disaster for anyone heavily invested in paper assets because they will be worth far less--or become completely worthless--when deflation kicks in.
2) Inflation can also spell disaster if your retirement portfolio or savings is heavily weighted towards paper assets. We're already seeing inflation kicking up food prices at an alarming rate. With more money being printed every day by our government, this can't help but drive inflation even further. This can be a death knell for someone heavily weighted in paper assets because the value of your investment will decrease. In contrast, anything not tied to paper assets can continue to increase in value.
3) Your investments can either be a cause of your retirement or an effect of it. If you can get past the idea that we can somehow fix this with more regulations and temporary fixes, you can see that these problems can only worsen. You can either work for as long as possible and hope things will get better OR take steps to prepare yourself for what's coming so you can still eat when others go hungry.
4) The Federal Reserve has promised to print $2 Trillion over the next couple of years and continue flooding our economy with the money supply. Flooding the economy with new money will NOT help our economic situation but will inflate prices even higher than they already are! Anyone who thinks this is a good thing and can't see beyond the end of their nose is in for a rude awakening when they can't afford to buy food or gasoline.
So, should I put it all in bullion/precious metals? No, there is no "one size fits all" for everyone. But we do suggest you diversify some of your wealth and retirement savings into precious metals; and while we can't tell you how much you should invest, we would suggest that 5% - 35% of your overall portfolio be invested in Bullion and Precious Metals (as part of a comprehensive, diversified portfolio).
If you think we're wrong about what's coming and can't read between the lines, please look at your 401(k) statements this quarter. Or ask yourself if food prices can continue to increase at an alarming rate, can you still afford to eat and fill your car with gas today, and what is the likelihood when you retire you will be able to do the same unless you move part of your savings into non-paper based assets like gold?
At any point, you can rollover part of your 401k, 403b or 457b retirement plan into a gold IRA plan and start the process of protecting your retirement wealth.
For those who aren't sure what a gold IRA is, it's a savings plan that gives you the ability to invest in precious physical metals like silver and gold (and sometimes platinum). The main difference between these plans and ordinary investment vehicles like stocks and bonds is that an IRA has much better protection against creditors – if someone tries to sue you, they can only get money from your traditional IRA. This limits exposure to associated liabilities such as those stemming from bankruptcy settlements since assets in an IRA cannot be liquidated until retirement age.
First of all, let's define the difference between a Gold IRA and regular gold investments. A Gold IRA can only be purchased in certified coins or bullion with an IRA custodian through a Self-Directed IRA LLC. The reason why is because each coin/bullion has to be specifically approved by the IRS for this type of investment. All other forms are not allowed in an IRA account, including mining shares or stocks in silver companies or any other company, even remotely related to gold, silver or other precious metals. Whereas if you invest in gold outside of an IRA, you can buy whatever coins and bullion you like.
The tax benefits of a gold IRA are like other types of IRAs. For example, at least some contributions can be deducted from your taxable income, depending on the type of IRA account you choose and your eligibility for destructibility (which depends upon whether your gold IRA provider offers full withdrawal flexibility). Therefore, this allows money to grow faster than it would otherwise be compared to investments outside of an IRA, where contributions are taxed as regular income. The primary benefit is that you will defer paying taxes until later when both gains and withdrawals are considered "qualified", which helps you avoid paying income and capital gains taxes simultaneously.
We hope this article has helped you answer the question as to whether you can retire at 60 with $500k. We are sure that diversifying part of your savings into a gold IRA either by rolling over a portion of your existing 401k or by a direct cash investment will help protect your savings and make for a more prosperous retirement.
To find out more details about gold IRA plans, request your guide to IRAs at no cost to you.
Although there are many retirement calculators available on the internet applying the principles set out above in this article will help you make this decision. We would always suggest you seek financial or legal advise from a qualified professional.
With an average life expectancy of 20 years plus after your retirement at 60 it is unlikely $300k will give you a sustainable living for 20 years. Read the article above to see our reasoning for this answer.
Although there are many retirement calculators available on the internet applying the principles set out above in this article will help you make this decision. We would always suggest you seek financial or legal advise from a qualified professional.
The answer to this question is complex and is largely dependent on the factor set out in the article above.
A Gold IRA allows you to hold precious metals in a tax-efficient way. Gold IRAs special tax treatment is kin to those offered by standard IRAs: Contributions made to traditional self-directed IRAs (SDIRAs) are tax-deductible. Qualified withdrawals from Roth accounts are tax-free.
Gold IRAs are always self-directed; this means you are always in control of what you put into them and what you take out of them.
Holding precious metals as a portion of your overall retirement planning can provide a level of security and resilience. Historically we have seen the prices of Gold, Silver Platinum and Palladium rise as we are going into an economic crisis.
How much money is required to retire at any given age is largely dependent on a number of things including, the lifestyle you want to have in retirement, the rate of inflation over your retirement years and the amount of risk you have where you save your retirement funds in. Please read the article above to help yopu define these factors and how they might apply to you.
