In 45 years in personal finance – as a CPA, a Wall Street investment advisor and a two-time Emmy-winning financial journalist – I’ve seen thousands of retirement portfolios, along with what protected them, what didn’t, and what most financial advisors consistently fail to discuss with clients who are within 10 years of retirement.
This article covers five of those risks. None of them are foreigners. They are all real. And almost none of them come to the general advisory meeting – because there is no commission in pointing them out.
If you already know you want to protect your savings with physical gold, you can request Augusta Precious Metals’ free Gold IRA Guide here and proceed.
Risk 1: Inflation is quietly cutting your retirement in half
Most retirement projections show you one number: your target savings balance. They rarely show you what that number will actually buy.
If you saved $600,000 today and inflation averages 4% annually over the next 20 years, the purchasing power of that $600,000 will grow to about $274,000 in today’s dollars when you’re in your late 70s. This is not a projection – this is arithmetic. Combine this further and combine erosion with it.
The Federal Reserve’s own data confirms that the US dollar has lost approximately 96% of its purchasing power since 1913. History does not promise that the next 20 years will be kind. The investors I’ve seen preserving their purchasing power most effectively haven’t relied on the dollar alone to maintain their value.
Risk 2: The IRS is a silent partner in your traditional IRA or 401(k)
Every dollar in a traditional IRA or 401(k) is never taxed. This sounds like a profit – and it is, if your money is growing. But it also means the IRS is a silent partner in your retirement account. Every dollar you withdraw is taxed as ordinary income at whatever rate Congress decides is fair at the time you need it.
And starting at age 73, the IRS will force you to start withdrawing the money, whether you need it or not. Required minimum distributions push many retirees into a higher tax bracket than they planned for – triggering Medicare surcharges, taxing Social Security benefits and reducing the tax efficiency of the entire plan.
This is the tax bill that almost no one is talking about during the accumulation phase. By the time it becomes visible, the options to manage it become quite limited.
The actual number in your retirement account
Take your current balance. Reduce taxes on each withdrawal. Then reduce it by 4% annually for 20 years after inflation. The result is your real purchasing power in retirement – and it may be much less than the number on your statement.To learn how physical metals can help address both risks, get Augusta Precious Metals’ free Gold IRA Guide.
Risk 3: When all you have is paper, everything falls together
A well-diversified portfolio protects you by spreading risk across different asset classes. The problem is that in a real financial crisis, most paper assets – stocks, bonds, mutual funds, ETFs – lose value at the same time. During the 2008 financial crisis, the S&P 500 fell approximately 57% from peak to trough. Most bond funds fell with it. A portfolio that looked diversified on paper was not diversified in practice.
Gold behaved differently. While paper assets collapsed in 2008, gold rose nearly 25% over the same period. Not because gold is magical, but because it does not depend on counterparty performance, corporate earnings or government solvency. It is a store of value that has operated independently of paper systems for thousands of years.
The investors I’ve talked to who weathered 2008 most effectively weren’t the ones who had the best stock picks. They were people who had wealth that didn’t keep pace with everything else.
Augusta Precious Metals offers a free personal educational web conference with an on-staff Harvard-trained economist – no cost, no obligation. It is designed to accurately answer these questions before you make any decisions. Request their free guide to get started.
Risk 4: A Bad Year at 63 There’s Nothing Like a Bad Year at 43
If you’re 43 and your portfolio has dropped 30%, you still have time. You can stop putting it down, let it heal, and continue to contribute. If you’re 63 and your portfolio drops 30% in the year you retire, the math is completely different.
This is called sequence of returns risk, and it is one of the most underappreciated threats to retirement security. When you start receiving income from a declining portfolio, you are selling assets at their lowest value and permanently locking in losses. The sequence of returns in the first five years of retirement has a greater impact on how your money lasts than your average annual return over the entire period, say 20 years or 30 years.
Investors who managed this risk best kept at least a portion of their assets in assets that do not move in correlation with equity markets – specifically so that they would have something to draw from without having to sell equities at lower levels during stock market declines.
Risk 5: A 100% paper portfolio is a bet you won’t realize you’ve made
If your entire retirement savings are in stocks, bonds, mutual funds and cash – all denominated in US dollars – then you have made a specific bet: that the US dollar will maintain enough purchasing power over the next 20 to 30 years to finance your retirement at the standard you have planned for.
This could be a good bet. This can not happen. But the investors I cover think about it carefully, generally concluding that making a clear, informed decision to hold some assets outside the dollar system – even 10% to 20% of the portfolio – is more defensible than inadvertently concentrating 100% of your retirement assets in one currency.
Physical gold is the most established way to do this. There is no argument that gold always goes up. There is an argument that owning something with a purchasing power history of 5,000 years is a rational hedge against the risks outlined in the four points above.
What serious investors are using to deal with these risks
A Gold IRA is an IRS-approved self-directed individual retirement account that holds physical gold and silver instead of – or alongside – traditional paper investments. If the transfer is executed correctly, you can fund the 401(k) or IRA with a rollover without any taxes or penalties.
I have spent time looking at this category of companies. The gold IRA industry has its share of high-pressure sales tactics, deceptive fee structures, and commission-driven agents. When I looked at this place with that suspicion, a company was standing outside the field.
Augusta Precious Metals – Named “Best Overall Gold IRA Company” by money magazine — has earned a reputation that is unusual for this category:
Zero complaints on BBB. Augusta is the only major Gold IRA company with an impeccable record – an A+ BBB rating and an AAA rating from the Business Consumer Alliance, with no unresolved complaints. In an industry known for controversies, this record is truly remarkable.
A Harvard-trained economist manages your education. Augusta’s Director of Education Devlin Steele designed and personally led a free one-on-one web conference for anyone requesting an information kit. This is not a sales call. This is an important education session designed to help you understand whether a Gold IRA is a good fit for your specific situation – before you commit to anything.
Transparent, flat fees. Augusta charges about $80 annually for account administration and $100-$150 for storage – fixed amounts, not percentages. On a $500,000 account balance, the difference between the flat fee and the 1% annual percentage fee is $4,800 per year.
Fee waived for up to 10 years. Every customer who opens a qualifying account receives zero custody and storage fees for 10 years. There is no qualifying round. Everyone gets it.
95% of the paperwork handled for you. Setting up a gold IRA and performing a 401(k) rollover is technically complex. Augusta coordinates custodian, depositary and IRS compliance requirements, handling virtually all administrative processes on your behalf.
The minimum investment is $50,000 – which is higher than some competitors and reflects Augusta’s focus on serious investors who will benefit from that level of service.
Get Your Free Gold IRA Guide from Augusta Precious Metals
Augusta’s free guide clearly explains how the Gold IRA Rollover works, what it costs, and whether it’s a good fit for your situation. No sales pressure, no obligation – and your request includes a free one-on-one web conference with a Harvard-trained economist.The short form asks for a phone number so the Augusta team can schedule your free web conference. You control when and what you respond to someone.
Named “Best Overall Gold IRA Company” by Money magazine. A+BBB. Zero complaints. Fee waived for up to 10 years. $50,000 minimum investment.
→ Get your free guide (no obligation)
bottom line
None of the five risks in this article require a market decline to cause a loss. They work in the background – rising inflation, rising taxes, tightening of correlations – no matter what the headlines say. This invisibility is what makes them dangerous to investors who are otherwise doing everything right.
The retirees I’ve seen protecting their assets most effectively share one characteristic: They made clear, informed decisions about each of these risks rather than leaving them unchecked. The Gold IRA is a tool to address several of them at once – and Augusta’s free guide is a straightforward way to understand whether it’s in your plan.
There is no cost to request a guide. There is no obligation to open an account. The only thing you risk is spending 20 minutes better informed than you are today.
Do not leave these risks unchecked.
Augusta Precious Metals – “Best Overall Gold IRA Company,” Money magazine. A+BBB. Zero complaints. Free one-on-one web conference with a Harvard-trained economist. Fee waived for up to 10 years. $50,000 minimum investment.→ Get your free guide now
MoneyTalksNews is an independent personal finance publisher. We may earn referral fees from partner services at no cost to you. Our editorial recommendations are based on merit, not compensation.