Exploring Non-Traditional Retirement Account Options

Retirement is an event many of us eagerly anticipate. We envision days filled with leisure, family, or even passion projects.

One of the most common vehicles for retirement savings is the trusty 401(k) or Individual Retirement Account (IRA). Both of which offer tax advantages and employer matches that sweeten the deal.

However, a new wave of non-traditional retirement account options can also help you reach your retirement goals. These innovative paths may not be as well-known, but they offer unique benefits that traditional accounts may lack.

To learn more about them, read on!

Health Savings Account (HSA)

A Health Savings Account, or HSA, is typically used to save for medical expenses. However, it can be an excellent retirement planning tool.

Contributions made to an HSA are tax-deductible and any earnings grow tax-free. Withdrawals for qualified medical expenses are also tax-free. But unlike traditional retirement accounts, there is no required minimum distribution at a certain age. This means you can continue to contribute and let your savings grow until you need it.

In retirement, any unused funds in the HSA can be used for non-medical expenses, subject to income tax. While an HSA may not offer employer matches like a 401(k), it does have a higher contribution limit and can still provide valuable tax benefits.

Roth IRA Conversion

A Roth IRA is a retirement account that allows you to contribute after-tax dollars and withdraw tax-free in retirement. However, there are income limits for contributing to a Roth IRA.

If you make too much money to contribute directly to a Roth IRA, one option is to convert traditional IRA funds into a Roth IRA. This does come with some tax implications as you will need to pay taxes on the converted amount, but it can be a strategic way to boost your retirement savings.

If you are trying to compare Roth vs. Traditional IRA, you may want to consider a Roth conversion as a retirement planning strategy. It allows you to diversify your tax risk in retirement by having both taxable and tax-free income sources.

Self-Directed IRA

A Self-Directed IRA allows you to invest in a wider range of assets beyond just stocks, bonds, and mutual funds. This can include real estate, private equity, and even cryptocurrency.

While this type of account may not be for everyone, it can provide more control over your investments and potentially higher returns. However, it’s important to do thorough research and understand the risks involved before diving into this option.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts, or REITs, are companies that own and manage income-generating real estate properties. Investing in REITs can provide a source of passive income in retirement without the hassle of managing properties yourself.

REITs also offer diversification as they typically invest in a variety of properties, such as apartments, office buildings, and retail spaces. This can help mitigate risk and provide steady returns over time.

Explore Non-Traditional Retirement Account Options

While traditional retirement accounts like 401(k)s and IRAs are popular choices for saving for retirement, it’s important to explore and consider non-traditional retirement account options as well.

It’s important to carefully consider your goals and risk tolerance when deciding which option is right for you. With proper planning and a diverse portfolio, you can set yourself up for a comfortable and fulfilling retirement.

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