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Establishing Retirement Goals in Your IRA

Video Highlights

[0:26]  Why should you review your IRA bank account statement at the beginning of the year?
[0:47]  Compare what you have with your retirement fund goals.
[1:21]  On what should you base your goals in retirement?
[2:07]  Here’s how to make sure your assets still match with your goals.
[2:32]  Watch out for accounts with assets that are not able to be sold quickly.
[2:53]  Why might you need to sell certain assets?
[3:27]  The saying “If you fail to plan, you plan to fail” applies to your IRA.
[4:01]  The information about your own IRA investments is something you need to know!

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It’s the beginning of the New Year and everyone’s talking about their New Year’s resolutions. So, as part of that, I will spend some time discussing resolutions or goals for your IRA in the New Year. Setting goals for your IRA are extremely important in the beginning, but it’s also important to go back a review your initial goals to make sure you’re still on track for the retirement lifestyle that you’re expecting.

If you already have a self-directed IRA, it’s important to know “what’s in it?” This is a good time to look at a statement to see what’s held in your IRA for a few reasons:

First, for your fair market valuation, or FMV. The fair market valuation deadline is quickly approaching, so I hope you’re making arrangements with plenty of time.

Second, now that you’ve taken a look at the assets you have in your IRA, it’s a good time to compare what you have in your IRA with your long-term goals for the IRA.

  • Did you have long-term goals for your IRA?
  • Have you been haphazardly investing in every “great deal” that your peers have thrown at you?
  • Do your investments fit into your goals, considering your age, the age you would like to retire at, and the amount of money you would like to comfortably retire with?
  • Have you ever considered these factors?

If you haven’t, it’s not the end of the world, but it is a good time to consider a few of these questions, form a game plan, and subsequently create goals.

Here are a few questions to ask yourself:

  • What does retirement look like to me?
  • When do I want to retire?
  • How much money will I need to retire comfortably?
  • How long do I have to accumulate that amount?

After you’ve thought about the questions above, compare them to your investments to see if they align with your goals for retirement. If they don’t, spend the next few months realigning them to satisfy the benchmarks you’ve made for your IRA. This is also a good time to write your goals down so you can go back one year, two years, perhaps even ten years from now and knows at a glance if you’re still on track to reach your retirement goals.

If you’ve had goals for your IRA since day one, then that’s great, but it’s still advantageous to review your assets and your retirement circumstances. Has anything changed in the last year, or possibly could change in the upcoming year, which could skew your plans or derail them completely? You might want to spend the next few months coming up with a strategy to fit your circumstances. This could mean liquidating one asset and buying another, or it could mean you start looking to liquidate all your assets so you’ll have enough money to start taking distributions. Non-traditional assets held in self-directed IRA may prove harder to liquidate than traditional assets, so you may want to use the next few months working towards liquidation. The choice is up to you, and you alone, but the bottom line here is to plan.

 “If you fail to plan, you’re planning to fail.”

If you haven’t asked yourself the critical questions pertaining to your IRA, now’s the time to start. It’s never too early to start planning your retirement.

 Take just 10 minutes to answer these questions:

  • What does retirement look like to me?
  • By what age do I want to retire?
  • How much money do I need to retain my current lifestyle through retirement?
  • How old am I and how long do I have to accumulate the money I need to retain my current lifestyle in retirement?

Write the answers down, share them with someone you care about, and let your goals be known. I once read somewhere that goals that aren’t written down are just wishes. I hope you take this opportunity to compare your assets and goals. And if you don’t already have goals, I hope you take the opportunity to find some, create them, or at least steal them from someone else.

Video Transcription:

Hi. Good afternoon. It’s Tuesday at Two and, today, we’re in the second Tuesday of January and we’re still talking about new beginnings; things we always look at in the beginning of the year, setting new resolutions and stuff. Today, I wanted to talk to you about setting goals for your IRA. The first thing I want to talk to you about is taking a look at your IRA and seeing what’s in it. If you have an IRA account with Sunwest Trust, you need to get your statement and look at it, so you can see what you have in it for a couple of reasons. Number one is, like I said before, you need to provide us with fair market values of those assets. This is a good time for you to look at your IRA for that sole reason. Then, the second thing to do, is to compare what you have in your IRA with what your long-term goals are for your retirement account. Now, the big thing is going to be, do you even have goals for your retirement account? Did you invest in something just because somebody came along, and they had this great investment that you thought was going to generate a great return? Perhaps you never really looked at it to determine if it would fit in the goals that you have for your retirement account: taking into consideration how old you are, how long you’re going to have before you need to use this account, how much money you think you need to have in it when that time comes?

If you don’t have goals, if you haven’t sat down and looked at your situation based on how much you think you want to make or how much you think you’ll need when you retire, how old you are right now, how much time you have to build this retirement account, then you should look at those things and make sure what you have in your IRA fits within those goals and that you’re heading in the right direction. I’ve heard stories about, if you’re going to be the captain of a boat and you don’t plot your course, then you don’t know where you’re going; you don’t know where you’re going to end up. You need to have goals along with the same goals you need to have for your personal life, those kinds of things. You need to have goals in place for your IRA account.

The other thing to look at is, if you had goals, did those assets still match with your goals? Has something changed over this past year, or is something going to change this coming year that might make those assets not really fit in with the goals that you have? If that’s the case, you may want to spend this year or the next few months figuring out how to get rid of those assets. Maybe liquidate those things and buy something completely different. When you’re dealing with a self-directed IRA, you probably have an account with assets in it that may not be able to be sold quickly, unless maybe you have precious metals or something. Therefore, it may take some time. Simply planning on selling those assets may be something that may take a year or longer to get taken care of. So, now is the time to start thinking about that. Do I need to make those sales in 2015? Am I going to turn 70 ½ and will I need the cash to make my RMDs? Am I going to turn 59 ½ and will I want to start taking money out? Do I need to maybe liquidate some assets so that I could start doing that?

So, look at where you’re planning on going. Do the assets in your IRA currently fit with those goals and plan for where you’re heading? Make those changes if you need to. There’s an old adage that I’m sure you’ve all heard, but it goes something like, “If you fail to plan, you’re planning to fail.” I think that not only applies to your personal life, your business life, your work life, but it also applies to your IRA. So, if you don’t have a plan for where your IRA is going and how you’re going to get there, what kind of return are you looking for on an annual basis? If you get that return, what’s your account going to be worth at the end of this year? What’s it going to be worth at the end of five years, perhaps ten years? If you haven’t sat down and done that kind of planning, I would strongly encourage you to do so. It’s not something that’s for just the number cruncher nerds like me. It’s something that everybody needs to do so that you know where you’re going to be and when you’re going to get there. Is that place that you’re going to get to where you want to be to begin with?

Be sure to tune in next week. We’re going to continue talking about starting a new IRA account and various things in this month. We’ll finish up in January with a couple of more Tuesday at Two’s. In February, because it’s Valentine’s month, we’re going to be talking about taking care of those that you love. We look forward to seeing you again next week. Thanks for watching.

Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.