Can You Still Really Bank on Your 401(k) Plan?
Published on December 6, 2016
According to a recent report from investment advisory firm Research Affiliates, not so much.
The report states that even making a 5 percent return on traditional investments in a 401(k) plan is not likely to happen over a 10-year horizon.
Research Affiliates looked at the default settings of 11 retirement calculators, robo-advisers, and surveys of institutional investors and came out with an average annualized long-term expected return of 6.2 percent. Taking 1.6 percent off for inflation, the number dropped to 4.6 percent (rounded up to 5 percent). The research considered plans containing mainstream stock and bond portfolios (60% stocks and 40% bonds) in target-date funds with 10 years to retirement. And you know what that means: either work longer to save more or get more aggressive with your retirement portfolio through self-direction.
Go ahead, be a retirement savings maverick and take control of your future with self-directed investments.
If you’re savvy about certain investments such as precious metals, commodities, real estate, and private placements, and you’d like to include these in your retirement plan, you can do so with a self-directed retirement plan at Next Generation Trust Services. After all, if you are already making these types of nontraditional investments outside of your existing IRA, why not make them part of a self-directed IRA that you control?
With self-direction, the account holder makes all his/her own investment decisions and can include a vast array of alternative assets not allowed in typical retirement plans. And, depending on your employer’s guidelines, you might be able to self-direct the 401(k) plan offered at work. Either way, you can read up on what self-direction is all about on our website, download our free white paper, or contact our helpful team with any questions you have about building up your self-directed retirement savings. Then, head on over to our Starter Kits to open a potentially more lucrative retirement portfolio with a self-directed IRA at Next Generation Trust Services.
