Gold IRA pros and cons seniors should know

After a rise in the price of gold this year, combined with ongoing economic uncertainty and still-lingering inflation, many investors may find appeal in gold. Gold not only makes a good hedge against inflation, but can help diversify your investments against periods of downturn. 

Gold IRAs, in particular, are useful for retirement-minded investors who want to take advantage of tax benefits while investing in the precious metal long-term. These accounts are self-directed IRAs that work similarly to regular IRAs — you can make contributions up to annual limits (pre- or post-tax depending on the IRA type) and withdraw upon reaching retirement age. 

Gold IRAs can be worth it for senior investors, too — but those already approaching retirement age may need to consider a few additional factors before deciding if a gold IRA is the right investment choice now.

Learn about how you can add a gold IRA to your portfolio today with a free information kit.

Gold IRA pros and cons seniors should know

Here are some of the most important pros and cons seniors should keep in mind before deciding to open a gold IRA.

Pros of gold IRAs for seniors

These are a few reasons a gold IRA may be a good option for seniors today:

• Tax advantages: There are different tax benefits to gold IRAs, depending on the type you choose. If you open a traditional IRA, you won't pay taxes on your contributions now but will be taxed when you withdraw in retirement. Roth IRA contributions, on the other hand, are taxed now but you won't owe any additional taxes when you withdraw later. No matter which type you choose, these allowances can help you benefit even more from the contributions you make to your retirement account.
• Store of value: Gold has a longstanding reputation as a safe store of value, which can be useful for seniors looking to secure their retirement funds. While the precious metal does still experience short-term fluctuations, its value over time tends to remain relatively stable and trends upward. If you plan to use your gold IRA for several years into the future, it may be a good option for stability.
• Diversification: Gold can make a good diversifier. By investing in a gold IRA, you can use gold to diversify your retirement portfolio against volatility in other markets. If the majority of your retirement plan is made up of stock investments, for example, gold can help you maintain value during periods of downturn. That's because gold's price frequently moves independently of the stock market — it often remains stable (or even rises) when the stock market is uncertain.

Explore all the ways you can invest in gold with a free investors kit today.

Cons of gold IRAs for seniors

Before making any new investment, you should also consider the drawbacks. Here are a few to keep in mind ahead of your decision to invest in gold:

• Timeline: Generally speaking, gold investing is ideal for long-term investors. Some of the best reasons to invest in gold are for stability over time (vs. growth elsewhere) and to be able to weather market changes through different cycles. While seniors can still benefit from these characteristics of gold, they don't have as long an investment horizon as younger investors with decades of market cycles ahead of them. 
• Returns over time: If you're looking for the best returns, you may want to look beyond gold. From its price history, it's clear that gold does trend upward in value over time — but you're not going to see the same exponential growth as you may in the stock market. That's why it's important to limit your gold allocation to a small portion of your portfolio (experts recommend around 5% to 10%) to still allow room for growth elsewhere.
• Cost: Another thing to keep in mind before you open a gold IRA is the potential cost. Not only do you need to know the current price of gold to determine how much you'll buy, but other costs could make this a more expensive option than buying gold bars and coins directly or investing in a regular IRA. That includes markups on the gold held in your IRA, potential one-time account setup fees and annual fees you may take on for your account management from the IRS-approved custodian.

Want to learn more about the details of gold IRA investing? Get a free investment guide here today.

The bottom line

A gold IRA could make a good addition to your retirement plan. Gold is a great diversifier, hedge against inflation and store of long-term value — and IRAs have benefits specifically designed for future retirement. But if you're a senior approaching retirement, though, it's more important than ever to make sure any additions to your financial plan are a good fit. Consider speaking with a trusted financial advisor before you invest who can help you understand if gold may fit into your portfolio.

Start learning more about gold investing today with a free information kit.