Is a Gold IRA for Seniors Smart for Your Retirement?

As you age—and especially once you near 65—smart, low-risk investing becomes increasingly important. Not only does your retirement depend on it, but it can also impact your legacy.

Gold IRAs are a low-risk investment method that can offer seniors an opportunity to protect and grow your earnings. These unique retirement accounts allow you to purchase precious metals like gold, silver, platinum, and more, rather than traditional investments like stocks and bonds.

As with any investment vehicle, however, it’s important to weigh the pros and cons. In this guide, we’ll dive deeper into how gold IRAs work and whether they are a smart financial move for seniors in retirement.

What is a gold IRA?

A gold IRA is a type of self-directed individual retirement account used to hold gold, silver, and other precious metals. You can also purchase tangible investments with a gold IRA, including real estate, art, and more.

The account can be funded by rolling over or transferring funds from an existing retirement account, or using cash or wire transfer. As long as funds are transferred or rolled over properly into your gold IRA, you don’t pay taxes on them.

You then work with an account custodian—a company or bank approved by the IRS to manage these accounts and handle all the paperwork—to use the funds in the gold IRA to purchase precious metals. 

Only coins, bars, and bullion that meet the IRS’s standards for quality can be purchased for a gold IRA. Your metals dealer should be able to point you to IRA-qualified metals. Once purchased, the metals in our gold IRA are stored in an IRS-approved depository. 

Expert’s take

Crystal Rau

CFP®

Gold IRAs can be fee-heavy and not as liquid as most would hope. And, when it comes to taking required minimum distributions, it can be a headache if your assets are all tied up in a gold IRA. If you’re considering investing in gold, I recommend limiting it to 10% or less of your total investments. Keeping gold outside of an IRA will provide more liquidity and fewer fees.

Read More

How to hold physical gold in an IRA

How does a gold IRA for seniors work?

Gold IRAs work for seniors much like younger investors, but there are a few key points to know, largely related to contributions and distributions. 

Gold IRA contribution rules for seniors

Once you reach the age of 50, you can contribute $1,000 more to a gold IRA each year than those under the age of 50. Contributing beyond these limits, however, results in a 6% penalty on the excess contributions.

	Annual contribution limit
Age 49 and younger	$6,500
Age 50 and older	$7,500

Prior to 2020, individuals older than 70.5 couldn’t contribute to a gold IRA—that rule has since been phased out. Meaning, as long as you turned 70.5 in 2020 or later, you can continue your contributions as long as you like, making it a potentially smart place to grow and safeguard your money.

Gold IRA distribution rules for seniors

When it comes to withdrawing your funds, gold IRAs work like traditional IRAs. You can start taking distributions from the account when you reach 59.5 years of age. If you try to withdraw before this point, you’ll owe a 10% penalty on the distribution amount. 

You aren’t required to take distributions beginning at 59.5 years, however. You can continue to let your metals grow in value. Once you reach 72 years of age, you’ll need to take your required minimum distributions (RMDs), as per IRS rules.

RMDs can be taken in cash or “in-kind” distributions, meaning the physical precious metals in your gold IRA are sent to you. 

To learn more, you can check out our guide to how gold IRAs work.

Is a gold IRA a good investment for seniors?

As you age, safer, more stable investments are often the best place to store your money. Though your earnings on those investments may be less, this approach significantly lessens the risk to your retirement plans. 

Considering the pros and cons of gold IRAs is a good way to understand if they are a good investment for seniors.

Pros

• Steadily rising prices

  Gold and other precious metals have proven to be a pretty steady investment—the price of gold over the last 5 years is up 52%. The price of gold is up 46% over that same time period. This makes them a good vehicle for slow and steady growth.

• Less market volatility

  Gold IRAs are more protected from market swings than investing in the stock market.

• Portfolio diversification

  Gold IRAs are a smart tool for diversifying your existing retirement portfolio. By investing in a gold IRA, you’re spreading your money out. Should the stock market turn or savings rates drop further, your entire retirement won’t be negatively impacted (just a part of it).

• Hedge against inflation

  Gold retains value over time, providing some protection against inflation compared to other investments.

Cons

• Gold IRAs are lower yield

  Gold IRAs can offer a lower-risk method for steady fund growth, but you likely won’t see as high yield returns as you would with other investment vehicles. Investing $1,000 in the stock market, for example, may net you much more cash than that same amount spent on gold bullion.

• Fees

  Most gold IRAs come with fees. The fees will vary by custodian and depository. You may have account set-up fees, storage fees, annual management fees, and even extra fees and taxes when buying your coins and bullion.

Taking a high-level look at how the pros and cons of gold IRAs compare to other similar investments can help seniors make a decision about where to invest their funds in retirement.

Investment	Pros	Cons
Gold IRA	Steadily rising prices for gold and silver	Account fees, lower-yield returns
Real estate	Potential for rental income, long-term appreciation, tax deductions	High initial investment, property management may be required
Bonds	Low market fluctuation	Longer maturity rates, low-yield returns

Everyone’s retirement plans and financial pictures are different, so consider speaking to a financial professional for the most personalized investment advice.

Expert’s take

Crystal Rau

CFP®

In most cases, if you are living off your investment accounts in retirement, we will want 35% to 60% of your portfolio in more conservative investments and 40% to 65% in equities so the account will continue growing. It really depends on your circumstances, though, including whether you have other income sources, such as Social Security and pensions.

Are there other ways to invest in gold as a senior?

If you choose to invest in gold, an IRA isn’t your only option. Seniors might also consider one of the other methods below:

Buying gold and storing it at home

You can, of course, buy gold bars and other metals and store them at home in a safe or safety deposit box. If you go this route, make sure you insure your purchases.

This approach can be a suitable investment method if you want something easy, hassle-free, and tangible. Physical gold investments can also easily be passed down, and there aren’t all the fees and storage costs that come with a gold IRA.

Investing in gold funds and ETFs

There are lots of mutual funds and exchange-traded funds that focus on gold and precious metals, and these offer a break from all those IRA-related fees and costs as well. 

Some of these invest in actual metals and bullion, while others buy stock in companies involved in the gold mining or refining processes. (You can also invest in these stocks directly).

The former is a higher-risk endeavor, as it depends on how each company performs over time and various environmental factors. Still, with higher risk does come higher potential rewards.

Buying gold futures

Gold futures give you the right to buy gold for a set price later. These require accurately speculating the future price of these metals and are best left to seasoned investors. You’ll also want to be comfortable with higher risk if you go this route.

Generally, riskier investments like futures aren’t advised as you get older and closer to retirement.

Where can seniors open a gold IRA account?

If you’re a senior looking to open a new gold IRA account, comparing your options is important. Our team has evaluated gold companies to find the best gold IRAs.

Expert’s take

Crystal Rau

CFP®

Gold can be a great way to hedge against inflation but so can stocks. Keeping your gold exposure to 10% or less will still provide “safety” in a portfolio without sacrificing returns. It’s important to have exposure to other parts of the market to ensure the portfolio will continue to grow along with having a portion in “safer” investments.

Make sure to look out for gold IRA scams

If you opt to open a gold IRA account, watch out for scams as you go through the process. Scams are quite common in this industry, and they could put your money—and entire retirement—at risk.

Here are the most common signs of a scam you should watch for:

• Mentions of rare or collectible coins, as these are unlikely to meet IRS approval
• Fake IRAs, where the company takes your funds and uses them to make purchases rather than putting them in an IRA account
• Misleading contracts, which often contain myriad fees and limitations
• “Store at home” IRAs, which tout storing your IRA-purchased gold at home rather than in an approved depository

There may also be other scams, so be mindful and ask questions if something looks suspicious. You can check out our guide to finding the best gold IRA company to compare several options.

Consulting with a financial advisor is wise to ensure you’re not only working with a reputable company but making the right moves for your finances and long-term retirement goals.