Can You Use Precious Metals for Retirement Savings?

Saving for retirement is a vital part of preparing for your future. Whether you plan to travel the world or just kick back and relax, you will need money to fund your retirement – and in most cases, social security just won’t cut it.

Most experts recommend investing in a mix of equities (stocks), bonds, and perhaps some real estate. But what about precious metals? Are precious metals a good investment for retirement savings?

Disclaimer: This page is intended for informational purposes only. It should not be considered as financial or investment advice. You should speak to a certified financial professional to determine the best investment mix for your specific situation.

Gold & Precious Metals for Retirement

First off, let’s define what we are discussing.

• Precious metals include gold, silver, platinum and palladium, among others. The two most popular for investing are gold and silver.
• Retirement savings include money, assets and investments that you set aside to fund your lifestyle in retirement. Retirement savings can be stored in a retirement account (IRA or 401k), in physical assets such as real estate or precious metals, or even just in a bank account.

With that out of the way, let’s discuss how these two mix. Is it wise to invest in precious metals to help fund your retirement?

Diversification

Precious metals are an easy way to diversify your retirement savings, which can potentially reduce risk and maybe even increase returns.

You’ve surely heard the advice to “not put all your eggs in one basket”. As cliché as it is, the advice is certainly valid when it comes to retirement savings. You should not invest 100% of your money in a single stock, or real estate in a single area, or even in any given asset class. And to be clear, you should not invest all your retirement savings in precious metals. In fact, you probably should keep precious metals under 10% of your total retirement savings.

In most cases, your retirement portfolios should be made up of:

• Equities, aka stocks. This could be broad index funds or a selection of individual stocks. Equities historically have offered the best returns, albeit with more risk and volatility.
• Bonds. This could be an index fund of bonds or a selection of individual bonds (government, municipal, corporate, etc.) Bonds have historically offered decent returns, along with much lower volatility.
• Other assets. This could be real estate, precious metals like gold and silver, and even assets like cryptocurrency. These assets can be risky/volatile, but because their prices move independently of the wider stock market, they can help greatly improve diversification.

Safe Haven

Gold and other assets are often considered “safe haven” assets, meaning that investors tend to flock to them when things get rough. This can sometimes mean that when the stock market crashes, gold can rise (although this is far from guaranteed).

This can provide two benefits. For one, it means that gold may do very well in times of great uncertainty, such as during a war or natural disaster. And it also means that gold in a balanced portfolio can help reduce the severity of market volatility along the way.

Physical Asset

Finally, precious metals are physical assets that you can hold in your hand. While this seems like a minor detail, it can make a huge difference in the case of a true emergency.

Precious metals are independent of the global financial system. This means that in a worse-case-scenario, such as a currency collapse or global bank run, gold would still maintain its value.

How to Invest in Precious Metals for Retirement

We’ve gone over the “why”, now let’s discuss the “how”.

There are a few broad ways to invest in gold for your retirement:

• Buying physical gold outside of retirement accounts.  This is the simplest, as you can purchase anything you want, store it securely, and then simply sell it as needed in retirement. However, this strategy does not offer any tax benefits.
• Buying physical gold in a gold IRA. This involves signing up for a precious metal IRA, which works similarly to a standard IRA (except for that you can use it to purchase and hold physical assets). This method involves more setup effort, but offers substantial tax benefits.
• Buying “paper” gold in a normal IRA or 401k. “Paper” gold is any holding of gold that is not physical; it could be gold ETFs, gold futures contracts, or indirectly, gold mining stocks. While we don’t typically recommend holding non-physical gold, the benefit here is that you can purchase these funds in your existing retirement accounts.

Want to learn more? Read through our precious metal investing guide.

Ready to start investing? Contact us today, or stop by one of our five locations in West Seattle, Bellevue, Lynnwood, Tacoma and Issaquah.