When you think retirement plans, the first thing you probably think of is the 401(k) plan. After all, most people’s first experience with saving is through a workplace 401(k). Next, you might know what an IRA, or Individual Retirement Account is. Anyone with earned income can start one, even if there’s no plan at your company. What the average American does not know is how big the self-directed retirement industry is. The lack of education about such plans is not shocking. But, here at IRA Financial, we are trying to change this.
Some Numbers to Chew On
Here are a few interesting numbers concerning retirement plans:
- Approximately $32 Trillion in Retirement Funds
- Of that, there is approximately $11 Trillion in IRAs
- About 2-3% (or $200 Billion in Self-Directed IRAs
Let’s put those numbers against some other industries to add some context. The cannabis industry, that is, legal marijuana, will grow to about $73.6 billion by 2027. The electric car market was about $162 billion in 2019. Lastly, the cyber security market was $50 billion last year.
This goes to show you just how big the self-directed retirement industry has become in recent years. And one more stat that will really blow your mind: Retirement and Pension plans tops the list of biggest industries by revenue in 2020 with over $1.2 Trillion. Obviously, this is great news for savers. People continue to be proactive in saving for the future. This is especially important for everyone during these difficult times.
Educating About the Self-Directed Retirement Industry
$200 billion is a good chunk of retirement savings, however, it’s only a drop in the bucket of all savings. Why? It’s all about education. The mainstream financial industry is huge. For example, the Investment Company Institute (ICI) is the leading association representing regulated funds globally, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States, and similar funds offered to investors in jurisdictions worldwide. The annual budget for ICI is over $60 million.
RITA, the Retirement Industry Trust Association is the main self-directed retirement association and its budget is far lower. All the best self-directed custodians, including IRA Financial, are member of RITA. We are all looking to do our part in spreading the word. Of course, it’s hard to fight the big banks. However, that is really not the ultimate goal. Banks and other large financial institutions are great places to save for retirement. If you are interested in stocks. mutual funds and the like, it’s easy enough to use your local bank. Of course, if you are looking for more choices, you have to look elsewhere.
Educating Americans is paramount to help everyone reach financial freedom by the time they retire. Of course, we feel the best way to prepare is to know all your options; not just want your bank tells you. They are in it for themselves of course. They make money when you invest with them. If everyone saving knew of all the options, it’s safe to say that the banks have the most to lose.
Now that you know some stats about the self-directed retirement industry, why should you look into it? The answer is simple, self-directing allows you to choose just about any investment for your retirement plan. With a Self-Directed IRA, you can invest in everything from stocks, bond and mutual funds to real estate, precious metals and cryptocurrencies. Plus, if you choose checkbook control, you are in total control of your decisions and never need custodial consent.
This allows you to diversify your retirement holdings. Instead of having everything in the risky stock market, you can put some money there, invest in real estate, and grab some gold as well. Generally, when one asset class falls, another picks up. The best advice anyone can get is not put all their eggs in one basket. It sounds cliche, but it really makes sense.
You might be thinking this sounds like a bad infomercial or a get-rich-quick scheme. In fact, there’s nothing quick about saving for retirement. The more time you give your investments to grow, the better off you are in the long run.
Not to mention the passive income you can generate. Investing in a rental property or business can give you a steady stream of income, without having to do much. Of course, nothing is foolproof. You must be diligent with every investment you make. It’s imperative to work with a financial advisor, who can help you devise a plan that works for your personal goals.
We are here to help, whether you are new to the self-directed retirement industry, or are a seasoned vet. We have tons of resources available to you, from our videos, podcasts, blogs and other sources. If you have any questions, feel free to reach out to us @ 800.472.1043 or send us a message on chat. We will gladly answer and questions or concerns you might have. Thank you for reading and we hope you will join the self-directed retirement nation!