Is Buying Gold a Good Retirement Plan?

gold and money

With the recent unease in financial markets, more and more Americans are looking for safety when it comes to their financial assets. The weakness in the banking system has many people scared and looking for alternatives. One of those alternatives is gold.

The gold price has shot up over the past two weeks as nervous investors have sought safety in the yellow metal. With the price hovering just under $2,000, the stage seems to be set for gold to make another great run, particularly if the banking sector’s weakness becomes contagious.

But while gold has traditionally been seen as a safe haven asset and a good store of value, does it make sense to buy gold as part of a retirement plan? That’s a question that many Americans have, and the closer they get to retirement, the more they want to know the answer.

Benefits of Owning Gold

Owning gold offers numerous potential benefits. Here are four of the most important ones to anyone considering buying gold as part of a retirement plan.


Diversification is one of the primary benefits of owning gold. Because gold often does well during periods of recession or financial turmoil, it is often considered to be a countercyclical asset. That’s why you’ll see the gold price soar when the economy begins to enter a downturn, because so many people start trying to diversify their portfolios with gold to get ahead of the market.

Many people undoubtedly think that owning a smattering of stocks and bonds is sufficient diversification. But as they found out last year, stocks and bonds can both fall at the same time. That’s why diversifying into other asset classes or geographic regions can provide additional protection and help minimize losses.


It’s one thing to own a valuable asset, but it’s another thing to sell it. You may have some valuable baseball cards that you collected when you were a kid, but if you can’t find a buyer for them, what are they really worth?

Thankfully gold doesn’t have that problem. Gold markets operate around the clock around the globe, and there are always buyers and sellers. Gold is one of the most liquid assets in the world, and can quickly be sold for cash when the need arises.

If you’re wondering whether you’ll be able to sell the gold you buy, the answer is that you’ll almost always be able to find a buyer. You may have to do a little bit of price shopping to find the best price for you, but you should be able to sell your gold with relatively little difficulty.

Safe Haven Asset

Gold has been considered a safe haven for centuries. Whenever fear or uncertainty present themselves, one of the first assets people look for is gold. That was the case in the 1970s, it was the case in 2008, again in 2020, and once again today as weakness in the banking system is manifesting itself.

Inflation Hedge

Gold’s ability to maintain its value and purchasing power against inflation has helped make it a much desired asset for those looking to protect themselves against inflation. During the stagflation of the 1970s, gold’s annualized growth rate was over 30% per year over the course of the decade, well outpacing inflation. Gold owners today undoubtedly hope that gold can repeat that kind of performance if inflation becomes entrenched today.

Potential Drawbacks of Owning Gold

Of course, every asset has its pros and cons. Yes, gold has some great benefits associated with it, but it also has some drawbacks. If you’re looking at gold as part of your retirement plan, here are two that you’re going to want to think about.

Storage Fees

Depending on how much gold you buy and how you buy it, you may end up needing to pay for storage costs. This could range from a few hundred dollars for a home safe to over a hundred dollars a year for storage in a safe deposit box or in a bullion depository.

These storage fees can eat into the returns your gold makes. If you have a large amount of gold and pay a fixed storage fee, that might end up only being a small percentage of your holdings. But if you only have a few thousand dollars in gold and pay $50-100 a year in storage costs, that can add up over time.

Storage fees will depend on where and how you want your gold stored. If you plan to have gold delivered to you at home, you may already have a safe, or you may feel that a hiding place in your home is sufficient. But if you buy tens or hundreds of thousands of dollars in gold and decide to pay for storage, or if you start a gold IRA and store your gold in a bullion depository, storage costs may be a necessity.

Not an Income Source

One drawback to gold is that it isn’t a source of income. That doesn’t mean it doesn’t make gains, however. It just means that the gains you make are the result of increases in the gold price.

It’s like the difference between growth stocks and value stocks. Most growth stocks don’t pay dividends. The companies that issue them want to reinvest all their earnings into the business rather than paying out dividends, so investors who buy those stocks make money only when the stock price goes up.

With value stocks, however, investors get paid dividends on a regular basis, so they’re making money even if the stock price goes down. Because gold doesn’t pay dividends, you don’t get the benefit of that extra income.

That’s not necessarily a negative thing, however, as gold’s long-term price growth narrowly edges out stock markets. But it’s just one thing to keep in mind, and a common argument you’ll hear from dividend stock investors who want to belittle gold.

Ways to Invest in Gold

One of the common questions newcomers to gold ask is, how do I buy gold? Well, there are a lot more options available today than just going down to your local coin shop and picking up some gold coins. And some of the options available can mesh very well with your retirement planning.

Gold IRA

One popular option for buying gold is through a gold IRA. A gold IRA is just an IRA account that owns and holds physical gold coins or bars. Those gold assets are managed by an IRA custodian and held in a bullion depository.

You can fund a gold IRA with a tax-free transfer or rollover of funds from existing retirement accounts such as a 401(k), 403(b), TSP, IRA, or similar account. This allows you to protect your existing retirement savings with gold without having to pay taxes or penalties.

A gold IRA is subject to all the same rules and regulations as other IRA accounts, including those pertaining to distributions. When you take a distribution from your gold IRA, you can choose to take it in cash or in physical gold.

Direct Gold Purchases

If you prefer not to use your retirement savings to fund a gold IRA, or if you prefer to store your gold at home, there’s always the option of a direct cash purchase of gold. Goldco offers a variety of gold coins from mints around the world, bringing you authentic gold coins directly from their manufacturers.

One thing you’ll need to be aware of is that when selling gold coins that you own outside of an IRA, their tax treatment is different, and you’ll have to pay taxes on your gains at the collectibles tax rate. Tax issues are something you’ll want to consider when retirement planning, and are something you should discuss with your tax advisor.

Gold ETFs

Some people prefer to buy shares in gold exchange-traded funds (ETFs). These offer exposure to the gold price through shares of funds that own gold. But there are numerous drawbacks to gold ETFs, and those shares can’t be converted into actual physical gold. For many people who want to own gold because it’s a physical, tangible asset and a safe haven, gold ETFs may not be the ultimate solution.

Considerations When Thinking About Gold

As with any other asset you consider for retirement planning purposes, gold has advantages and disadvantages. Whether or not gold is the right fit for your purposes will depend on numerous factors that you’ll have to take into consideration when determining if buying gold is a good retirement plan.

Financial Situation

The first thing you’ll want to consider is your financial situation. How much money are you bringing in each month? How much are you spending? How much debt do you have?

These are all basic questions you should ask yourself before making any financial decisions, but they’re also vitally important when it comes to retirement planning. Sure, you may want to safeguard your finances, but if you’re struggling to make ends meet or have student loans, car loans, or other debt you need to pay off, you may be better off focusing on those needs rather than looking to put your money into gold or other investments.

If you’re in a better financial position, with a steady income, a disciplined budget, and plenty of savings, you might be in a better position to think about buying gold. Remember that gold, just like any other asset, isn’t guaranteed to go up in price. Yes, the long-term trend for gold is to rise, but there will be inevitable periods in which the price drops, and you have to take that into account when planning.

Financial Goals

Your financial goals will change over time as you grow older, build a family, buy a house, etc. What you may think is a good retirement plan at age 25 may be completely different by age 35, and then again by age 45.

As you progress in your career you’ll be exposed to new information, you’ll have access to new means of saving and investing, and you’ll discover things that you wished you had known earlier. We all come to the table with limited information, and we all strive to increase the amount of knowledge we have about saving and investing as we grow closer to retirement.

In general, the younger you are the more aggressive your investment strategy will be, and the older you are the more you’ll focus on maintaining your existing wealth rather than gaining new wealth. Gold can play a role in both of those strategies, but the size, type, and method of gold you buy might differ.

Investment Horizon

Your age and state in life also determine your investment horizon. If you’re in your 30s and have 30 years to retirement, that means you probably have at least 50 more years to live. That’s a very long time horizon, with a large number of years of earning potential ahead of you.

On the other hand, if you’re 60, you’re probably nearing retirement and only have about 5 years of work income ahead of you. The next 20 years after that are going to be funded by the savings and investments you’ve made already.

The younger you are, the more you can afford to ride out periodic recessions and financial crises, because you have time on your side. The older you are, the more devastating a financial panic could be to your financial health.

During the 2008 financial crisis markets lost more than 50% of their value. If you’re on the verge of retiring, you can’t afford to sustain those kinds of losses. With the recent troubles in the banking system and the growing likelihood of recession, it’s more important than ever to make sure that your wealth remains safe and secure in the event of a market crash. And that’s where gold can help play a role.

Learn More About Gold

Goldco has helped thousands of customers over the years benefit from owning gold, and we’ve made over $1 billion in precious metals placements. We work directly with mints to get you the gold you want, and our numerous 5-star reviews speak to the efforts we go through to make sure that our customers are satisfied.

If you’ve been working hard for years to build up your retirement savings, now is not the time to watch them disappear in front of your eyes. Call Goldco today to learn more about how you can make gold a part of your retirement plan.

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