Private Debt Can Help Lift Fixed Income Yields for Baby Boomer IRAs

 |  General Self-Directed IRAs
baby boomer

By J.P. Dahdah, Founder & CEO of Vantage

If you were born between 1944 and 1964, you’re in an age demographic labeled as a Baby Boomer.

Regardless of where you fall within the age spectrum, there is an IRA strategy widely used by investors recommended by their advisors.

As you age, you direct your IRA towards safer, lower-risk investments. Baby Boomers need to consider various factors and determine an allocation percentage supporting their retirement goals.

Investors following sound financial management principles share the idea that an increasing fixed income/debt allocation ranging between 45-85% is sensible within their IRA.
Many mistakenly think as long as their fixed income allocation percentage falls within a suitable range for their age, everything should work out.

Identifying what percentage of your nest egg to place into a fixed income allocation isn’t the only task at hand. It can be a problematic blind spot in this line of thinking.

Sadly, an overwhelming number of Baby Boomers today are learning a hard lesson. Their retirement distribution amount relies on the performance of their holdings, not their selected allocation percentages.

To add insult to injury, those who maintain their IRA savings solely in Wall Street are suffering a low-yielding debt market, causing income shortfalls for millions of retirees.

What should you consider doing as a Baby Boomer faced with a similarly concerning situation?

First, realize if under-performing investments cannibalize your IRA, it may be time to consider a new strategy to salvage your retirement years. You’re probably thinking, “Sure, ok, but to what assets do I redirect?”

This leads to the second step I encourage investors to take. Commit to finding alternative fixed-income assets that promise to produce yields high enough to satisfy your retirement income needs.

Our financially thriving clients have chosen to re-allocate their IRA holdings directly into private debt instruments.
Private debt investments include promissory notes, trust deeds, equipment leases, real estate asset-based lending, and small business loans.

These, and many other alternative fixed income assets, can be purchased inside a Vantage Self-Directed IRA.
Perhaps now is the best time to evaluate if private debt investments can help boost your IRA portfolio.

Happy investing!

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