The Most Important Retirement Planning Questions You Need to Consider

Estimated reading time: 3 minutes

Planning for retirement can be a significant undertaking. While the principles of successful retirement planning are easy to understand (e.g., begin saving early in life, try to max out your tax advantaged contributions each year, and invest according to your personality and risk profile), reaching your retirement goals can often be quite a challenge.

There are plenty of important questions you should ask you financial advisor, of course, but first you need to ask yourself a few questions:

When do you want to retire? This is probably the first question that every individual considers when they begin thinking about how they’re going to handle their own retirement. Asking yourself this question is important because the longer you have between now and your target retirement age, the more options you’ll have on how to get there.

What do you want your retirement to look like? The next question to ask yourself is what you want your retirement to be like when you reach that age. Where do you want to spend your retirement years? Do you want to relocate to another part of the country (or to another part of the world)? Do you envision your retirement as a luxurious one, or a more modest one?

Do you plan to work during retirement? It’s a relatively recent development that retirees would consider working in any capacity once they reach their retirement years. But for many, the prospect of not having the structure of gainful employment – even if it’s just on a part time basis – can be a significant negative. Note that this need to be gainfully occupied can be accomplished through volunteer work, consulting or a number of other methods.

Am I doing everything I can? Tax-advantaged retirement plans such as IRAs and 401(k)s have annual contribution limits. It’s important to try to contribute the maximum allowable amount each end every year, because if you fail to do so you won’t be able to contribute more in later years to make up the unused amounts.

Once you’ve asked yourself these baseline questions, you can then meet with your broker or investment advisor and consider the following:

What is the state of your current portfolio? In order to evaluate your current retirement plan, you must have a solid understanding of your current portfolio. When you consider all of your accounts together (including assets and savings that are held in non-retirement accounts), do you understand how your investment risks are allocated, and are those risks appropriate for your investment approach and tolerance for risk?

Does your current portfolio require adjustment? Once you understand the composition of your current investment portfolio, you can discuss with your advisor whether you need to make any adjustments with respect to either your current assets, or to future amounts that you’ll contribute to your accounts.

Keep in mind that your situation will change over time, so you’ll want to periodically ask these questions again from time to time.

Best Practices for Tracking Your Real Estate Investments

Estimated reading time: 3 minutes

tracking real estate investmentHow well are your stock market investments performing? Even if you don’t know the answer off the top of your head, you could probably calculate a performance measure fairly quickly. Chances are your investment broker has access to online account tools that give you all the information you need. Even if you have other types of investments in your portfolio, you may use investment management software or online service to help you track those investments.

The same holds true for real estate. Like any other investment type, you can only evaluate your real estate investments if you have all the necessary information available – in a form that’s easy to use. Here are some things to consider for tracking your real estate investments. regardless of whether they’re in a self-directed IRA or are one of your taxable investment holdings.

Tracking Your Expenses. Some investment types don’t generate much in the way of current expenses. For example, you probably pay a commission each time you buy or sell a publicly traded stock owned. Beyond that, you might not pay an annual fee to the investment brokerage that handles your account. But simply owning the stock doesn’t cause you to incur additional fees.

Real estate investments, on the other hand, require a broad range of fees, from annual maintenance and upkeep expenses, to hazard (homeowners) insurance, to property management fees for someone to manage your property and find you new tenants whenever necessary. Identify all of the categories of expenses you’re likely to face, and use the tools that best suit your recordkeeping style. This might be a piece of dedicated financial software. or possibly a notebook and pencil.

Tracking Your Taxes. While your expenses for investment real estate may to some extent the variable (for example, you can save on management fees by managing a property yourself), your annual property taxes will be beyond your control. In addition to monitoring and measuring these taxes, you’ll want to set up a system whereby you ensure that you are never to link went in meeting your tax obligations.

Tracking Your Time. Real estate investments also differ from many other investment types in that they require a much more active management style. You might stay on top of your stock and mutual fund investments by regularly reviewing quarterly reports and disclosures, and researching those companies and funds to make sure that your original investment assumptions are still true. But there’s nothing you must actively do in order to maintain your investment positions.

In contrast, investing in real estate will require much more of a “hands-on” approach. For developed properties, this will include finding tenants, maintaining any structures or improvements on the property, and making sure all taxes and other legal obligations with respect to the property are met. Even in the case of undeveloped or speculative properties, you’ll still have to pay taxes, ensure the property and make sure that no problems arise. By tracking your time you can make sure you wouldn’t be better off with outside assistance.

Investing in real estate can be financially rewarding, but it takes more effort than buying stocks or bank CDs, Make sure your record keeping process for real estate investments helps you meet your financial goals.

How to Find the Best Custodian For Your Self-Directed IRA

Estimated reading time: 3 minutes

As the popularity of self-directed IRAs continue to grow, individuals who are interested in this type of retirement account quickly learn that there are many different custodians who offer these accounts.  Unfortunately, because most of these custodians are not quite as widely known as the banks, investment brokerages and other large financial institutions that tend to offer traditional IRA custodial services, it can sometimes be a challenge to find the best custodian for your self-directed IRA. Here are some tips to finding the custodian who can best serve your needs.

Experience and Focus. Concentrate your custodian search toward those who have significant experience in offering self-directed IRA custodial services, and who focus on those services. In addition, a financial institution that concentrates its efforts on providing those custodial services may be better able to fill your needs than a larger firm that offers a broad range of financial services but no focus on self-directed IRAs.

Ease of Account Setup. The process of setting up a self-directed IRA should be no more lengthy or burdensome than setting up an IRA with a traditional custodian. Quest Trust Company, for example, provides easily downloadable new account informational packages and forms on its website.

Fees. It’s important to take any potential custodian’s fee structure into consideration, but not to make low fees be the only factor you use in your decision. Expect to pay a quarterly or annual fee based on the size of your account, plus additional fees depending on the types of investments you make with your self-directed IRA.

Account Type Options. While most retirement savers will choose a traditional IRA format for their self-directed IRA, you may want the flexibility to consider other types. Look for a custodian that offers different types of IRAs. Remember that virtually any legal IRA structure can use a custodian who offers the self-directed features. Quest Trust Company, for example, offers self-directed custodial services for the Roth IRA, SIMPLE IRA, SEP IRA, and even other types of retirement and tax advantaged accounts such as the 401(k), health savings account (HSA) and Coverdell ESA.

Avoid Aggressive or Questionable Legal Interpretations. You might notice that one type of self-directed IRA not listed above is the so-called “checkbook control” or “LLC” self-directed IRA. While there are some self-directed IRA custodians who offer this type of account, the legal basis for checkbook control of IRAs is not well established. Since checkbook control over IRA assets arguably runs contrary to the other rules and regulations governing retirement accounts, trusting the tax-advantaged classification of your retirement funds to this type of account or custodian may present a significant risk.

Information and Education. Retirement account rules and regulations are always changing, so even the most experienced investors can benefit from a custodian who provides educational opportunities to their clients. Look for custodians who have educational materials on their website, and who provide in person or online seminars and educational opportunities as well.

After taking all of these factors into account you should be able to find the best custodian to help you set up and maintain your self-directed IRA.