Why you should add gold to your retirement plan now
According to a recent study, Americans believe they need a lot of money to retire.
How much, exactly? Based on the April 2 study from Northwestern Mutual, Americans say they need $1.46 million in the bank to retire comfortably. That's up 15% from the same survey conducted in 2023. While that number will vary widely based on each person's goals and retirement savings, it's never too early to start planning for your golden years. And with inflation persistent and borrowing costs high right now, it may be beneficial to consider alternative ways to grow and protect your money.
One such way can be through gold. By adding a gold individual retirement account (IRA) to your retirement portfolio, you can secure multiple advantages that other, more volatile assets simply cannot provide. But the timing here is key. And right now is a great time for many to add gold to their retirement plan. Below, we'll detail three reasons why you may want to act now.
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Why you should add gold to your retirement plan now
Here are three smart reasons why you should add gold to your retirement plan now.
It can help with inflation
Hope that the latest inflation cycle was cooling was high at the start of 2024 but that optimism has waned following three consecutive reports showing inflation running hotter than expected. With inflation problematic for much of the last two years, many have turned to gold for help. Gold can often be an effective hedge against inflation by maintaining its value and even rising in price when inflation is high. And that's been emphasized in recent weeks as the price of the precious metal has hit numerous record highs.
It makes sense, then, to add gold to your retirement plan now to offset the negative impact inflation has on other, more volatile asset classes. And with inflation sticky, it can behoove investors to act aggressively by adding the protection a gold investment offers now.
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It can diversify your portfolio
During any market, it's smart to have a diversified portfolio to better offset losses. But that's especially true today. Fortunately, gold can help do just that. While it's not quite the incoming-producer stocks and bonds can be (although, lately, it can be), it can be a smart way to diversify your portfolio, particularly as you head toward retirement and need to be more conservative with your funds. Big losses could jeopardize your retirement plans, so it's important to protect against those with a diversified portfolio in which gold plays a role.
That said, that role will be different for each investor. But, in general, most experts recommend limiting the presence of the precious metal to 10% or less of your overall portfolio.
There's a growing demand
The numerous record prices gold has surpassed since March 1 underline the growing demand for the metal. That's an advantage for any retirement asset, since you can sell it more easily should you want to adjust your retirement plan. And while not a traditional income producer, the rapidly rising price of the metal could turn a profit for investors who buy low and sell high. And even if the current trend ultimately cools, unlike stocks, bonds and real estate, there will always remain a strong demand for gold and silver. That will give your retirement portfolio an edge no matter how long you plan on remaining in the workforce.
The bottom line
Gold has historically been a smart addition to any diversified retirement portfolio. But recent developments have arguably made it a critical addition. Thanks to the hedge against inflation and portfolio diversification it provides - and a rapidly rising price right now - many could benefit by adding the shiny, yellow metal to their retirement plans. Just make sure to thoroughly consider the pros and cons of this unique investment opportunity so that you can truly maximize the benefits it offers today.
