401k Investment Options for Retirement Crisis

401k Investment Options for Retirement Crisis

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It's common for people to find that they haven't accumulated enough money for their retirement as they near their senior years. Even if you start saving early, your investing strategy or external economic factors might have sabotaged your investing efforts. If you are nearing your 40s and 50s and find that you might not have enough money to comfortably fund your retirement, this is the time to make changes.

While you should start saving more at this time if it's reasonable to do so, taking steps to protect your existing savings is also prudent. Your response to a retirement crisis of this type should involve protecting your existing wealth while looking for ways to grow your retirement savings consistently. Do this by looking for new ways to diversify your investments. One good option to consider is to roll your 401k funds over into a self-directed IRA or SDIRA. Once your SDIRA is set up, you can begin looking into alternative or nontraditional investment types that the IRS allows with this type of account. This often includes investing in precious metals.

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401k Investment Options for Retirement Crisis

Why Should You Do a 401k Rollover?

Even if you're not currently facing a retirement crisis, things may change in the future. Having an SDIRA in addition to your 401k will provide you with a sense of financial security in the event that something does happen. If your employer goes out of business, you lose your job, or you decide to change careers, you might only have a limited time to move your funds out of the employer-sponsored 401k plan.

If you are facing the possibility of having insufficient savings to retire, an option to consider is to find a second source of income. Freelancing or working a traditional part-time job are options to consider. Since you won't qualify for a 401k plan with those types of positions, you'll need an IRA where you can put your extra disposable income. Opening an SDIRA will give you a method for investing money from that second source of income.

A problem you might run into as you try to make up for your lack of retirement savings is the contribution limits set out by the IRS. In 2022, an individual or head of household earning less than $129,000 can contribute up to $6,000 into their 401k and IRA collectively. That limit is slightly higher at $7,000 for adults over 50 years of age.

You can get around this issue when opening your self-directed IRA by doing a rollover from your 401k account. The rollover doesn't count toward your annual contributions, and you can roll over as much or as little as you choose. You can also do multiple rollovers over time, allowing you to contribute strictly to your 401k and rolling over funds into your SDIRA as your retirement wealth grows.

401k Investment Options for Retirement Crisis

How Do You Roll Your Funds Over Into a Gold IRA?

A common reason people put off rolling their 401k funds over into a traditional or self-directed IRA is that they feel overwhelmed by the process. It may be helpful to know that this isn't something you'll have to do without assistance or guidance. Additionally, the type of rollover you choose will determine the complexity of the process.

Indirect Rollovers

If you're less trustful of technology, you might prefer an indirect rollover. This involves contacting your 401k manager and informing them that you want to roll some or all of your money over into a different IRA account. They will usually direct you to fill out a form that requests information regarding your accounts and the amount you want to roll over. Once they receive and process the form, you'll receive a check for the rollover amount.

This is the part that can get a little tricky. You'll have 60 days to deposit the check and submit your rollover paperwork to the IRS. If you miss that deadline or your paperwork gets lost, the IRS will assume you've taken an early withdrawal from your 401k. In that case, you'll be expected to pay income taxes on the full amount, and you'll have to pay early withdrawal penalties.

Even if you do process the rollover in a timely manner, you will still face tax issues. Income taxes will be automatically deducted from the amount you withdraw. If you don't replace that amount when you deposit the money in your SDIRA, the IRS will charge additional taxes on the remaining amount. In this way, you'll face double taxes.

Direct Rollovers

The issues you'll face with an indirect rollover are avoided when you choose a direct rollover, which is why most financial advisors recommend this process. In this type of rollover, the funds you want to deposit in your self-directed IRA will be sent via an automatic wire transfer. Delays in depositing the rollover amount are avoided because the wire transfer is instantaneous.

Your SDIRA custodian and your 401k plan administrator will communicate with one another to process the rollover for you. They will send you a fortification once the transfer is complete so you can continue setting up your self-directed IRA. Your SDIRA custodian or the precious metals IRA company you choose to work with will help you submit the necessary documentation to the IRS.

Since this process is streamlined through the use of the internet, it's completed in a shorter period of time. While this is helpful in ensuring you meet the 60-day deadline, it also benefits you financially. The time that it takes to process your rollover is time that your money is sitting idle. An instantaneous wire transfer will give you access to your money much sooner, allowing you to invest it immediately.

401k Investment Options for Retirement Crisis

Why is Gold a Good Choice for Protecting Your Retirement Savings?

Once you have your self-directed IRA set up, you'll have a number of different choices in terms of how you'll invest that money. Many people open their SDIRA for the sole purpose of investing in gold. Here are a few reasons to invest some or all of your funds in gold assets.

Gold Performs Well When Other Investments Fail

The primary reason every investor is advised to diversify their holdings is to ensure they won't risk everything with one type of investment. While this means investing in a variety of industries, it's important to bear in mind that a large scale economic downturn will affect stocks in multiple industries. It may even affect the market as a whole.

When you own gold bars and coins that you keep in a U.S. depository, the money you have tied up in those gold assets will be protected. That's because gold values rise when paper investments crash. As stocks begin to fall, investors will abandon them and invest their remaining resources in gold. The higher demand this creates will drive up the value of gold.

Inflation Drives Up the Value of Gold

Over time, inflation causes the dollar to lose value, and that drives up the costs of goods and services. In addition to this type of gradual inflation, global events and a change in the economy can cause the onset of more immediate inflation. In either situation, physical assets, such as gold, will become more valuable. Since the value of paper currency is lower, more of it is required to buy physical commodities, and that includes gold.

For this reason, inflation is a good thing for a gold investor. It means any gold that you own and securely store will grow in value over time. You won't have to do anything with it except to keep it secure. When you're ready to retire, your gold holdings will be worth considerably more than the amount you initially paid to buy them.

Gold is Easily Liquidated

Imagine you're retired and taking consistent monthly disbursements. Now, imagine you fall ill one month and have unexpected medical expenses that cause you to spend more of your retirement disbursement amount in a shorter period of time. Liquidating your stocks or other paper investments might take too long. While you're waiting to receive an extra payment that month, you might run out of groceries or miss an important bill payment.

If you used your savings to buy gold, your precious metals IRA company will help you liquidate some of your gold holdings. They may have a generous buyback program or they may be able to connect you with another investor who is willing to pay a fair price for your gold. This process is often faster and less complicated since your gold IRA company already has the infrastructure set up to handle the sale.

401k Investment Options for Retirement Crisis

What Are the Top 3 Gold IRA Companies?

If you’re ready to get started, you’ll first need to choose a gold IRA company. They can help you set up your SDIRA account and depository. The following companies are highly rated by both their customers and independent consumer advocacy organizations.


An important factor to look at when evaluating self-directed gold IRA companies is the initial purchase amounts. Augusta Precious Metals does require a $50,000 initial purchase for their gold IRA customers, but that’s because they want to attract serious investors. Rather than simply selling their products, they want to work with investors throughout their lifetimes. To that end, they offer a free one-on-one webinar to their new customers.

In addition to the webinar, Augusta provides rollover assistance that helps new customers fund their SDIRA accounts. They also have an extensive library of informational material to help you learn about gold investing. The company provides lifetime customer support for as long as you maintain an account with them. They are known for a transparent fee schedule that helps their customers make informed decisions when buying precious metals from them.

#2. Goldco


Here is a widely known gold IRA company that prioritizes customer service over sales. They have a broad library of educational material that covers topics that will help you learn the basics about precious metals investing. Their resources will teach you how to read the market and how to use gold to meet your retirement objectives. Before you open an account with them, you can request a free start-up kit that will provide some basic information about the company and gold investing.

Goldco, like the other companies mentioned here, works with established IRA custodians and U.S. depositories that have been approved by the IRS. This adds to the convenience of working with them. They will assign a support representative who will help you with your rollover and advise you in purchasing their gold products.

While anyone is free to open an account with this company, beginning investors will find their services especially helpful. To start, they have a considerably low initial purchase requirement. You only need to buy $5,000 in gold and silver products to qualify. They’re also widely known for their fee transparency and for keeping their fees lower. Currently, they’re offering a year free of fees for new customers.

American Hartford Gold is also recognized for their generous buyback program. They offer a guarantee on prices to ensure their customers are getting the best possible deal when liquidating their gold. They have a library of educational resources, which has been created with the help of Harvard-educated financial analysts. New customers receive silver bonuses worth $10,000 when they meet qualifying purchase requirements.

Final Thoughts

There are many advantages to opening a self-directed IRA, but all of those benefits come down to giving you greater control. You'll have a stronger influence in how your money is invested and how much of your funds go into each investment type. This gives you the ability to use gold and other precious metals to protect your future as you continue to work towards building up your retirement finances. As the economy fluctuates more unpredictably, having this level of control over your retirement funds will give you greater peace of mind.