Who Is a Gold IRA For?

who-is-a-gold-ira-for?

More and more Americans today are getting worried about their financial well-being. High inflation, weak markets, and the beginning of trouble in the labor market have many people worried about the future. Recession seems more likely than ever, and people want to be prepared.

Those of us who remember the 2008 financial crisis want to make sure that we don’t suffer the same fate as millions of Americans did back then, as they watched years or even decades of investment gains wiped away in a matter of months. That means preparing to protect your investments is of the utmost importance.

Many Americans remember the performance of gold during the financial crisis, as gold gained 25% in value during the same time period that markets lost more than 50% of their value. And that’s why many people today are turning to gold to protect their assets against the threat of recession.

One method of investing in gold is through a gold IRA. While much of the marketing of a gold IRA seems geared towards older investors, a gold IRA can benefit Americans of all ages. So if you want to know who a gold IRA is for, read on to learn more.

What Is a Gold IRA?

If you’re not already familiar with a gold IRA, it is nothing more than an IRA account that holds physical gold coins or bars. A gold IRA is subject to all the same rules and regulations as any other IRA account, and offers you the same tax advantages as any other IRA account.

Benefits of a Gold IRA

There are numerous benefits to investing in a gold IRA, but there are four that stand out.

Portfolio Diversification

If you have existing tax-advantaged retirement accounts like an IRA or a 401(k), there’s a good chance that you’re invested mostly in financial assets such as stocks, bonds, mutual funds, ETFs, or index funds. Very likely your 401(k) plan or IRA custodian doesn’t offer the opportunity to invest in physical assets like gold, or alternative assets like real estate, commodities, or cryptocurrencies.

But a gold IRA is a type of self-directed IRA that puts you in control of your assets and allows you to choose what you invest in. A gold IRA holds physical gold coins or bars that are managed by an IRA custodian and stored at a bullion depository. But the types of coins or bars you purchase are yours to choose from, as long as they’re IRA-eligible.

By diversifying your portfolio with a purchase of physical gold, you can alter the risk profile of your portfolio and help protect yourself against loss in the event of a recession that hammers Wall Street and financial markets. Even investors who downplay the importance of gold will sometimes hold a small percentage of their assets in gold in order to provide themselves with diversification.

Safe Haven Asset

Gold has served as a safe haven asset and as a store of wealth for centuries. When times get tough, people turn to gold. And when paper currencies, stocks, or bonds become worthless, gold often remains as one of the last stores of value.

Inflation Hedge

Gold has also served as an inflation hedge for years. Over the long term it maintains its value and purchasing power against rising inflation. Whereas the dollar has lost 86% of its purchasing power since President Nixon closed the gold window in 1971, gold has risen over 4,700% in value.

Tax Advantages

Because a gold IRA is treated just like any other IRA, it offers the same tax advantages as any other IRA. A Traditional gold IRA uses pre-tax dollars to buy gold, gains are made tax-free, and taxes are only paid when you take a distribution. A Roth gold IRA uses post-tax dollars to buy gold, gains are made tax-free, and you pay no taxes when you take a distribution.

You can also fund a gold IRA with a tax-free rollover or transfer from an existing 401(k), IRA, TSP, or similar retirement account. That allows you to protect your existing retirement savings with an investment in physical gold.

Who Can Invest In a Gold IRA?

When you search for information about gold IRAs, you may get the sense that they’re only for older people, but that’s not true. Americans of all ages can invest in a gold IRA, subject to the same rules and regulations as any other IRA account.

Gold IRA for Under-35s

For younger Americans, the primary limit to their ability to start a gold IRA is going to be finances. Because gold IRAs often have fixed fees for account maintenance and gold storage, they can benefit those with larger account balances. Those fees can eat up a large portion of the yearly gains for smaller accountholders.

That’s why you may see many gold IRA providers recommend a minimum investment of around $25,000 or so in order to make a gold IRA worth your while. For those starting out in the workforce, that may be more than you have saved up in tax-advantaged accounts already. But as you get into your 30s and have more savings built up, wealth protection may become increasingly important to you.

Even if you don’t have enough money to start a gold IRA, that doesn’t mean that you can’t buy gold. Buying gold coins to store at home or in a safe deposit box has been a time-honored method of gold accumulation. Just like incremental investments to your 401(k), IRA, or other retirement accounts, buying small amounts of gold over a long period of time can help you reach your goals.

Gold IRA for 35-50

From your mid-30s to your 50s will normally be your prime earning years. And the savings and investments you’ve built up should be going to work for you. As you watch your savings accumulate, wealth preservation will become a more important goal.

This is the point at which you’ll likely have built up enough savings to be able to roll over or transfer funds into a gold IRA. And you’ll also likely have enough income to be able to make additional annual contributions to a gold IRA, if that’s what you choose to do.

Gold IRA for Over-50s

Once you reach age 50, retirement account rules begin to change. For one thing, you’ll be able to start making catch-up contributions to your retirement accounts. For IRA accounts, that means being able to sock away an extra $1,000 a year.

When you reach age 59 ½, you’ll no longer be subject to age-based early withdrawal penalties from your retirement accounts, although you’re probably not going to want to start making distributions from your retirement accounts this early. And once you reach age 72 you’ll have to start taking required minimum distributions (RMDs) from your 401(k) and IRA accounts.

But even once you’ve reached age 72 you can still make contributions to an IRA, as long as you have earned income. You can also continue to make rollover contributions to IRA accounts. And if you have Roth IRA accounts, those aren’t subject to RMD requirements.

Is a Gold IRA Right for You?

A gold IRA can be a useful investment tool for anyone. But to know whether it’s right for you, you need to assess your financial situation, determine your financial goals, and decide whether a gold IRA is right for your particular circumstances.

Some people enjoy the peace of mind they get from knowing their gold is stored safely and securely in a bullion depository. They have significant amounts of retirement savings they want to protect, and they want to ensure that their assets remain safe and sound.

Other people believe that if you can’t hold an asset in your hands that you don’t really own it. For these people, ownership of physical gold coins that they store at home is the only way to go.

No matter which camp you fall into, Goldco has options for you. We work with experienced gold IRA custodians and bullion depositories to make sure that your retirement savings are well managed and protected when you make the decision to start a gold IRA. We also have established relationships with mints around the world, ensuring a steady supply of gold and silver coins to our customers, as well as ensuring that the gold coins you buy are guaranteed to be authentic.

With thousands of satisfied customers and over $1 billion in successful precious metals placements, Goldco has become one of the most trusted names in the precious metals industry. We value our customers and work hard to ensure that you are able to take full advantage of the ability to protect your savings with gold. Call one of our precious metals experts today to learn more about how you can benefit from a gold IRA.

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About the Author: Paul-Martin Foss