Blame it on the flailing economy, the high cost of living, or bad habits-   but  Americans are not great savers in general and for their retirement  savings in particular. This is not a new trend and it does not appear to be reversing.

As reported recently in a New York Times article, fifty-eight percent of American workers are not enrolled in a pension or 401(k) plan. For those who do participate in a 401(k) plan or who are heavily invested in stocks and bonds, their assets have ridden a crazy roller coaster over the past 12 years that put a huge dent in their retirement savings.

In addition, the beleaguered Social Security system will get walloped by the baby boomers now reaching retirement age in record numbers. The Social Security Administration* reports that nine out of ten individuals age 65 and older receive benefits.
• These benefits represent 39% of the income of elderly Americans.
• However, for 53% of elderly married beneficiaries and 74% of unmarried persons, Social Security is at least half of their retirement income.
• There is a portion of elderly Social Security beneficiaries for whom the picture is even tougher: 23% of married couples and about 46% of unmarried persons rely on Social Security for 90% or more of their income.
*http://www.ssa.gov/pressoffice/basicfact.htm

This is not a sustainable model, especially as the government weighs the raising of the retirement age or reducing benefit increases to save the Social Security fund for the long term. Toss in our longer life spans and the rising cost of living and it’s clear the U.S. retirement model needs an overhaul of some kind.

Renovate Your Retirement through Self-Direction
Individuals can renovate their own retirement strategy with a self-directed retirement plan. With all the alternative assets allowed through self–direction, investors can take control of their futures by investing in a broader array of assets beyond stocks, bonds, and mutual funds.

Anyone can open a self-directed IRA at any age and start investing in traditional and non-traditional assets, with the potential to build a more lucrative retirement portfolio. If your 401(k) isn’t doing it for you, if you’re concerned about how the stock market will perform in coming years, or you feel that relying on Social Security is not a safe bet,  it’s time to see if a self-directed retirement plan is the overhaul you need to breathe new life into your retirement nest egg.

A survey by Ameriprise Financial shows that on average, retired and pre-retired Americans have lost $117,000 in retirement savings due to unanticipated events. That’s a lot of capital to recoup. Big hits from the recession have played a key role in hampering future retirement comfort and savings, experienced as low interest rates on investments, the decline in the market, and less home equity to count on today.

However, the recession isn’t the only unexpected factor affecting people’s retirement savings; others reasons Americans are struggling with retirement savings include supporting a child longer than expected due to the bad economy, paying off college loans without finding a decent job to help make those payments comfortably, or healthcare expenses.

Another problem is that Americans have a relatively poor track record for saving; many people wait too long to save or don’t put aside enough money for later. In fact, many middle-class Americans withdraw large sums from their 401(k) plans before they retire, because in America we like to spend now—on lavish vacations, hobbies, restaurant dining, or “got-to-have-it” items such as home electronics.

SAVING FOR RETIREMENT IS TOUGH

Speaking of saving, USA Today reports that fifty-eight percent of American workers are not even in a pension or 401(k) plan, and an international study* concluded that compared to workers in other countries, U.S. employees are at a disadvantage in terms of having a stable pension system. Add to that the reduction of employer-based health benefits (and less medical coverage), and the sharply rising cost of health insurance which many business owners and the self-employed are paying—all which negatively affect retirement savings.

At Next Generation Trust Services, we understand that life happens, and we can’t stress enough how important it is to invest in your retirement early and often! For individuals who know and understand how to invest in nontraditional assets, doing so through their retirement plan is a great way to build up a diverse portfolio beyond stocks, bonds, and mutual funds.

Before the unexpected happens—another recession that whittles down your money market account, or a family situation that eats away at your disposable income—consider opening a self-directed IRA to build your retirement portfolio. You can get more bang for your hard-earned buck when you diversify your retirement investments through the alternative assets allowed through self-direction. You can read all about self directed IRAs here, or contact us as Info@NextGenerationTrust.com with any questions you have about how to open or invest in a self-directed retirement account.

*Conducted by the Mercer consulting firm and the Australian Center for Financial Services

Founder Jaime Raskulinecz is Recognized as a Leading Woman Business Owner in New Jersey by WCEC and Own it Ventures.

Jaime Raskulinecz

Jaime Raskulinecz, founder and CEO of Next Generation Trust Services in Roseland, N.J., has been named a finalist for two prestigious awards that recognize women business owners in New Jersey: Woman Business Owner of the Year, from the Women’s Center for Entrepreneurship Corp. (WCEC) and Leading Women Entrepreneurs & Business Owners, sponsored by Leading Women Entrepreneurs, LLC in partnership with New Jersey Monthly magazine.

She will find out in October if she is the winner of the Leading Women Entrepreneurs & Business Owners award at the organization’s annual awards event. Twenty-five finalists were selected out of a field of several hundred nominees for exhibiting outstanding performance in four areas: market potential, innovation, community involvement and advocacy for women. According to its website, Leading Women Entrepreneurs, LLC commends New Jersey women entrepreneurs for their service, leadership, community service, and to the state’s economic recovery. The Top 25 will all be recognized for their accomplishments and contributions at the special event in October, when the winner is revealed.

Raskulinecz was also one of 12 finalists for the WCEC’s first annual Woman Business Owner of the Year; this award recognizes women who have inspired or motivated other women in business and who “exemplify the personal commitment to their business, their community, and the support of women’s efforts to lead, mentor, and grow in their professional environment.” Nominees were chosen as finalists for their demonstrated leadership and passion in their professions, and for their commitment to making a difference in the lives of others through their business and community service.
The winner was announced at the WCEC awards gala, “Women Making the Mark,” on May 15, 2013.

“I love being a business owner and am honored to have been recognized for what I enjoy doing so much,” said Raskulinecz. “To be associated with a group of such talented and highly accomplished women entrepreneurs makes it all the more special.” This is the third year she has earned finalist recognition for Leading Women Entrepreneur & Business Owner; other honors include 2011 Business Woman of the Year from the Essex chapter of the New Jersey Association of Women Business Owners (NJAWBO) and being named NJAWBO’s statewide honoree in 2012.

“I love being a business owner and am honored to have been recognized for what I enjoy doing so much,” said Raskulinecz. “To be associated with a group of such talented and highly accomplished women entrepreneurs makes it all the more special.”

Raskulinecz founded Next Generation Trust Services in 2004 out of her own desire to make real estate investments within her IRA and being unable to find a professional to help her make those transactions. With self-directed retirement plans, the account holders make all their own investment decisions, and may invest in a broad array of alternative assets that include real estate, precious metals, mortgages, unsecured loans, private placements, commodities, and much more. Administrators like Next Generation Trust Services hold the assets, execute the transactions, and manage all the account administration and paperwork associated with the self-directed IRA.

For more information about self-direction as a retirement wealth-building strategy, call (973) 533-1880, email Info@NextGenerationTrust.com, or visit http://NextGenerationTrust.com.

Next Generation Trust Services (NGTS), headquartered in Roseland, New Jersey, is a professional third-party administrator of self-directed retirement plans. NGTS provides education, administrative support, and account maintenance to individuals interested in self-directing their retirement portfolios with a wide variety of investments that are not typically found in an IRA, such as real estate, precious metals, notes and mortgages, private placements, accounts receivables, limited partnerships, hedge funds, and much more. Next Generation Trust Services serves clients globally via its website, http://www.NextGenerationTrust.com. For more information on self-directing a retirement plan, call 973-533-1880, 888-857-8058 (toll free), or e-mail Info(at)NextGenerationTrust(dot)com.

In light of yesterday’s tragic event, Next Generation extends its condolences and deepest sympathies to Boston, the marathoners, and the victims and their families. We wish for a full recovery for those injured and strength for those in mourning. We will continue to keep all of those affected in our thoughts and prayers while we hope for a resolution.

In just one week from today, the deadline for filing 2012 individual tax returns and making all 2012 IRA (Traditional, Roth, ESA, HSA) contributions will arrive. This means any and all contributions intended for 2012 must be postmarked by April 15^th in order to be applied correctly. Anyone who currently holds a SEP IRA, your deadline for SEP-employer contributions is based on your company’s filing date including any extensions they may have received.

If you are one of the few running around like a chicken with your head cut off because April 15^th snuck up on you, not to worry! If you won’t make the April 15^th deadline, you are able to request an automatic 6-month filing extension for your personal return on Form 4868.

Any questions or concerns you may have regarding the April 15^th deadline or your personal tax return, please consult your financial planner, tax advisor, or CPA.

When inheriting an IRA from a deceased spouse or parent, a lot more is involved than just transferring the assets or funds to a new bank account. The IRS has established certain rules that must be followed to avoid having the entire amount of the inheritance taxed immediately.

Although there are several perks to owning an individual IRA account, like having the interest, dividends, and capital gains grow tax-deferred, an inherited IRA must go through the process of being renamed or retitled to reflect the status change. Again, if this name change doesn’t take place, the beneficiary may face tax penalties.

However, these requirements do not just apply to IRAs, previous employer 401(k) plans are subject to the same rules as IRAs when it comes to retitling. Although most individuals rollover funds from their 401(k) to an IRA upon retirement, it is important to know what types of retirement plans the deceased held.

This knowledge is particularly important since the baby boomer generation is growing old. They are inheriting IRAs from deceased spouses and parents, and the number of tax issues related to inherited IRAs is steadily increasing. It seems that many people, including some financial planners, are unaware of the requirements the IRS has put on inherited retirement plans. For example, a surviving spouse does not need to retitle the deceased spouse’s retirement plan if they held a traditional IRA. Additionally, this will allow the surviving spouse to defer taking distributions until age 70 ½. Younger spouses who may need the money before age 59 ½ will face a 10% tax penalty for taking an early distribution. However, younger spouses can avoid the 10% penalty if they retitle the IRA to an inherited IRA. If younger spouses who retitle the account to an inherited IRA are smart, they can retitle the IRA again at age 59 ½ in order to defer any further withdrawals until age 70 ½.

Children and/or non-spouse inheriting the IRA are required to immediately retitle the IRA to avoid penalties are mandated to take a yearly distribution (known as a death distribution) based on the account’s value. If the beneficiary of the inherited IRA dies before depleting the account, their beneficiary must again retitle the IRA to avoid penalties, and so on.

Should you find yourself the recipient of an inherited IRA, your best choice is to immediately consult your financial planner or tax advisor to ensure that you follow IRS guidelines. Once an inherited IRA is distributed for neglecting to retitle, the process cannot be undone and the entire account balance will be distributed. For more information on inherited IRAs, check out the article by Post-Gazette.com, “Planning can help avoid tax penalties and ensure growth for inherited IRAs.”