Wise Women Self-Direct

No surprise here Hartford Financial Services Group reports that women are more worried than men (64% of women and 46% of men) about outliving their retirement assets. More women (83%) than men (69%) are worried about inflations effect on their retire

By: Jaime Raskulinecz, CPM

IRA & 401(k) Insights

This could stem from the fact that, typically, women work 12 years less than men and wind up with a median retirement income that is just about 58% of men’s.

This study came out a bit before the current economic conditions.  We would add that women live longer than men on average and have to factor that into their retirement planning.  Most studies also show that, on average, women are less aggressive investors than men as well and therefore have a lower rate of return.

Our typical client for self-directed accounts is a male in his 50’s.  This study should prompt more women to get more involved in planning for their retirement and looking into self-directed plans so they can get more control over their returns.

There are numerous resources available that help us to become more educated in the myriad investment options available.  Investment real estate is just one example of the non-traditional investments that interest our clients.  Loans, including mortgages, undeveloped land, and interests in start-up companies are just a few of the other possibilities.  There are groups around the country where both novice and experienced investors can come together to network and learn from each others’ experience.

Self-directed retirement plans aren’t for everyone.  But if you’re willing to take the time and effort to take control of the investments in your retirement plan, you may have more of a chance of increasing your returns to create a more secure retirement.  

Many women have left a job in order to take time to raise a family.  This means that they may have 401(k) plans from these previous employers, which can easily be rolled over to a self-directed IRA.  Additionally, many of our clients, both men and women alike, do not realize they are eligible to contribute to an IRA on behalf of a stay-at-home spouse.  Just because a woman may be out of the work place for family reasons does not mean that her retirement planning has to be put on hold.

Not only can you use a self-directed retirement plan to help your own future financial situation, but you could also help another woman to achieve her financial goals.  We have several clients who have done just that in a number of creative ways.  One woman used her IRA to lend money to a friend who was purchasing her first home.  The new homeowner makes her monthly payments to the IRA and the loan is secured by a mortgage on the property so the IRA has the right to foreclose on the property in the event of default.  

Another client used her Roth IRA to arrange a joint venture with an entrepreneurial friend who was looking for capital to start a business.  As this new business is growing, the Roth IRA is sharing in the profits, tax-free.  We know two women who both opened self-directed IRAs and rolled over balances from previous employers’ 401(k)s.  They have partnered those accounts to purchase a piece of commercial real estate and the IRAs are collecting regular rental income from the property.

For family oriented women, a Coverdell Education Savings Account may also be self-directed.  These plans may be set up for any child under the age of 18 and they are not restricted to biological descendants. These accounts are used to save for future educational expenses, such as tuition and supplies.  You may contribute up to $2,000 per child, per year.  The funds are contributed on an after tax basis (like a Roth IRA), and may be withdrawn tax free for qualified educational expenses.

These savvy ladies have all taken control of their retirement funds by self-directing, and are reaping both financial and emotional rewards.  They have all told us how great it feels to be in control of their own financial futures and to be helping someone else along the way.  We also regularly get calls from friends and acquaintances of these women, who want to get more information about how they too can take control of their futures.

As a woman-owned company, we at Entrust Northeast look forward to the day when women’s financial knowledge and success is equal to that of a man’s.  Spreading the word about self-directing retirement plans is one way that women are helping each other to achieve financial independence and success.  

If you are interested in getting more information about self-directing or would like to one of our free info sessions, please call (888) 857-8058 or visit us at www.EntrustNortheast.com.

Jaime Raskulinecz, CPM is the CEO of Entrust Northeast, LLC, a NJ licensed Real Estate Broker and CEO and principal of Rainbow Property Management, LLC, AMO.  Entrust Northeast, LLC is a locally owned and operated office that is part of The Entrust Group, the largest and oldest administrator of self-directed retirement plans in the country.  Entrust Northeast has become one of the first and only area companies to enable investors to harness their IRA assets to purchase a wide array of nontraditional investments such as real estate, notes, private placements, accounts receivables, limited partnerships, gold, as well as stocks, bonds, mutual funds, and certificates of deposit.  Ms. Raskulinecz has been a successful real estate investor herself for more than 20 years.  For more information or to schedule a workshop or presentation, contact the office at 888-857-8058 or Info@EntrustNortheast.com.