Do you have a leaky 401(k) plan?

Published on November 27, 2018

Plug up the hole with self-direction

According to a study published earlier this fall, many households are pulling their retirement savings together again, 10 years past the Great Recession. A Retirement Security Retrospective: 2007 Versus 2017 reported that:

• Among Millennials, retirement savings increased from $9,000 in 2007 to $36,000 in 2017
• In Generation X households, savings in retirement plans went from $32,000 to $71,000
• Baby Boomers more than doubled their retirement savings, from $75,000 to $157,000
• Employee plan participation rates were steady: approximately 8 out of 10 eligible workers participated in retirement plans and their savings rates were nearly the same—nine percent of pay in 2017 and eight percent in 2007.
• However, 58 percent of workers and 49 percent of employers surveyed said they or their businesses are still recovering financially. Many workers are still not planning enough for retirement and are also withdrawing money from retirement accounts, according to the survey’s findings.

According to the study, leakage from 401(k) plans remains a big issue when it comes to retirement planning and retirement accounts; this leakage refers to employees taking out loans from their workplace retirement plans or making early withdrawals. The report showed that nearly one-third of workers withdrew funds from their 401(k)s, IRAs or other retirement accounts by 2017.

Fix the leak with a self-directed retirement plan at Next Generation

Just as you can with a Traditional or Roth IRA, you can also self-direct a 401(k) plan if you are a business owner, depending on your plan administrator’s policies. If your employer-sponsored 401(k) plan is eligible to roll over, you can also move those funds into a self-directed IRA. Self-directed IRAs and 401(k)’s enable investors to build a more diverse retirement portfolio by including alternative assets such as real estate, precious metals, notes, and private equity. If you are already investing in these outside of your existing retirement plan and want to develop more resilient retirement savings that don’t hinge on stocks, bonds or mutual funds, opening a self-directed account might be right for you.

You can read more about self-direction in our white paper library, and our team at Next Generation is available to answer your questions and educate you about this type of retirement strategy. Contact us via email at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058.