When I heard about the Roth IRA in my 20s, I knew it would be right for me. It was in the late 1990s and a lot of people were talking about the "individual investor revolution."
According to a recent article in Yahoo Finance, a new report by Pew Research Center shows more investors in my Generation X are gravitating toward self-directed retirement plans including the Roth IRA.
In addition, the researchers found Gen-X investors are starting to worry about retirement at a younger age. I know I have been planning for my retirement since I was in my mi-20s.
Being skeptical about the market
I wasn't as skeptical about the stock market until I watched my account take a nose dive during the dot-com bubble in the late 1990s. Even to this day, some of the technology stocks that sold for $80 a share in the late 1990s now only sell for a few dollars or less. Researchers say a lot of Gen X investors are opting for self-directed retirement plans because they don't have as much confidence in market-based retirement plans. When I got a full-time job with a 401(k) in 2001, I was disappointed I only had a limited number of options for investing. I think a lot of Gen-X people are naturally cynical so it's no wonder many of us rather handle our own finances.
Having a backup plan for self-employment
I have been able to invest in a Roth IRA in addition to my company-sponsored 401(k) plan. If I ever go back to being self-employed, I plan to take a look at other self-directed retirement plans such as the solo 401(k), which is also called the individual 401(k) or the self employed 401(k). I plan to rollover any funds from my previous retirement accounts into a self-directed plan.
Weighing the different options
What's interesting to me about self-directed retirement plans is that they allow people to invest in things other than the traditional stocks and bonds. I could invest in real estate, golf or various small businesses. Even though I haven't strayed far from the traditional path yet, it's nice to have different options to consider. Anything is better than the so-called sideways market we have experienced for the past decade.
Saving enough for retirement
According to Scottrade's sixth annual American Retirement study, 60 percent of Americans say they aren't saving enough for retirement. The study showed 84 percent of Gen Xers hold a tax deferred retirement account, which is up from 77 percent the prior year. Fifty-one percent of Gen Xers said they have an IRA account. Compared to the other generations, the Gen Xers surveyed indicated they are working harder to earn more money. I think most people I know from my generation are picking up the pace at work so they can avoid being broke in retirement and get rid of debt.
Although I may have to delay retirement until I'm in my 80s, that all could change for people in my generation if we had another booming economic cycle. But most of us have learned that just because we invest for the future, doesn't guarantee any return.
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More from this contributor:
- Employment & Career
- retirement plans
- Roth IRA