Retirement is often an occasion for celebration, but it also requires preparation. While many prospective retirees may feel ready to reduce or eliminate their working hours, it’s important to first understand the financial realities involved. Creating a retirement plan is critical for many Americans, especially during volatile market times like we’re experiencing. U.S. Money Reserve recently released their special report on the subject: “Protection in the Risk Zone.” The report analyzes the current market’s volatility and options for wealth protection—specifically, a gold or precious metals IRA.
According to U.S. Money Reserve, “As retirement savers face uncertain and tumultuous times, the rising popularity of the self-directed IRA comes as no surprise. Among its many benefits, a self-directed IRA permits you to hold the broadest possible asset choices. While portfolio holders are familiar with traditional paper-based assets, many do not realize they can also purchase gold and other precious metals using a tax-advantaged self-directed IRA.”
This article takes a closer look at the financial risks associated with retirement and discusses how diversifying a retirement portfolio may help mitigate those risks.
What Is the “Retirement Risk Zone”?
The Retirement Risk Zone encompasses the last 10 years of working life and the first 10 years of retirement. Market shifts during this period can have a more substantial impact than in the decades before retirement, when markets (and thus portfolios) have more time to rebound from potential shocks. If your portfolio is not well-diversified and the market takes a downturn while you are in the Retirement Risk Zone, your overall portfolio and retirement plan could be severely affected.
Research has also shown that portfolios experiencing a severe market downturn or shock within the 20-year Retirement Risk Zone are less likely to ever fully recover. This compounds the impact of retirement itself on a portfolio, which may be expected to involve more spending than earning.
Portfolio diversification is one strategy often recommended for those seeking additional protection for their portfolios. This strategy involves spreading wealth across a variety of assets and asset classes that may react differently to changes in the market, thereby reducing a portfolio’s overall risk exposure. Examples of asset classes include:
- Money market funds and CDs
- Commodity funds
- Real estate
- Precious metals
Safe-haven assets are those that have historically maintained or grown in price during times of market turmoil or uncertainty, when other assets may falter. For example, a Treasury bill is often seen as a safe-haven asset because it is issued and backed by the U.S. government—and thus a Treasury is always repaid in full at maturity. Another example of a safe-haven asset is gold, which has increased significantly over the long term while the dollar continues to lose its purchasing power in part because of inflation.
In its recent report, U.S. Money Reserve reviews the impact of gold as a retirement protection option, especially for those in the Retirement Risk Zone. The report’s findings explore the effects of the Great Recession, when the S&P 500 Index dropped 37% and a quarter of U.S. households lost as least 75% of their net worth. In the following years, demand for gold surged, reaching a then-all-time high price of over $1,900/oz.
According to the U.S. Money Reserve report, “Negative returns [during the Retirement Risk Zone] can lead to an increased risk of running out of money much sooner than you expect.” With more than 75 million Americans within the Retirement Risk Zone today as the baby boomer generation continues to mature, proper diversification may be more critical than ever before. And according to U.S. Money Reserve, precious metals like gold may offer a long-term strategy for helping protect wealth.
For more information, you can download the complete Special Report from U.S. Money Reserve. When you’re ready to explore portfolio diversification with gold and silver, U.S. Money Reserve’s team of Account Executives is available to answer questions and assist you in creating a unique, personalized precious metals portfolio.
About U.S. Money Reserve, America’s Gold Authority®
U.S. Money Reserve is one of the nation’s largest private distributors of government-issued gold, silver, platinum, and palladium products.
Founded in 2001, U.S. Money Reserve has grown into one of the world’s largest private distributors of U.S. and foreign government–issued gold, silver, platinum, and palladium legal-tender products. Hundreds of thousands of clients across the country rely on U.S. Money Reserve to diversify their assets with physical precious metals, primarily in the form of legal-tender gold and silver coins and precious metals IRAs.
U.S. Money Reserve’s uniquely trained team includes coin research and numismatic professionals equipped with the market knowledge to find products for precious metals buyers at every level. U.S. Money Reserve goes above the industry standard to provide superior customer service, with the goal of establishing a long-term relationship with each and every one of its customers. U.S. Money Reserve is based in Austin, Texas. Like them on Facebook, connect on LinkedIn, and follow on Twitter.