How Much Gold Should You Own at Retirement?

As gold IRAs continue to climb in popularity as retirement vehicles, more and more investors are jumping on the gold train. There are many good reasons for this, but the consistent growth of gold IRA investments has generated a number of important questions.

One of the biggest is also one of the most obvious — how much gold should you have in your financial portfolio when you retire? And what investment vehicles should you be using, ideally?

It’s a subjective question, of course, but there are some objective standards you can use. We’ll explore some of those in the sections that follow and give you some general guidelines and things to keep in mind along the way.

gold retirement

Gold Amounts By the Numbers

If you’re looking for a percentage number as a guide to how much gold you should have in your portfolio when you retire, the most commonly quoted range is 5-10 percent, although there are experts who will go higher with their percentage numbers and those who prefer to stay in the 3-5 percent range.

It’s important to keep your goals in mind when you’re determining this percentage number. Most retirement-oriented gold investors are using it as a hedge against inflation in the short term, and as a longer-term vehicle, it’s the stability of gold that tends to be the primary attraction.

It’s also important to stay focused in your overall view of the market. One of the most common mistakes among would-be retirees is hearing all the gloom-and-doom predictions related to flat currency and thinking that the best strategy is to go heavy on gold. That may or may not be a good idea, but it depends largely on your individual situation.

What Strategy Should You Use?

There are many recommendations when it comes to gold investment strategies and the percentage of gold you should have in your portfolio at retirement, but exploring strategies can also become a double-edged sword.

It’s easy to become strategy-hopper, i.e., you read about one approach, fall in love with it, then realize that your love was mere infatuation when you read about the next strategy that appeals to you.

For some retirees, the best strategy is to have no strategy at all. Instead, make a list of what you want and don’t want when it comes to your portfolio as a whole, then analyze how gold might fit in.

Basic Questions to Ask

If you do decide to take this approach, here are some questions to ask yourself.

How important is liquidity to you? If it’s a huge factor and you don’t have many liquid investments, then your gold percentage should get smaller. If you already have plenty of liquid investments, then you may want to shift to a higher percentage of gold to help balance and stabilize your portfolio.

What’s your level of knowledge about gold price swings and other issues like the cost of storage, security and so on?

If your level of knowledge here is high, that will help you correlate what you know and come up with an appropriate percentage, not to mention the right investment vehicles. If it’s not, then you have some homework to do.

How does gold fit into your income formula, if it does at all? Getting direct returns from gold investments is very difficult, so if one of your retirement goals is to increase your immediate income, you want to downshift when it comes to the amount of gold you have as part of your portfolio.

What are your instincts when it comes to your investment approach, generally speaking? Are you risk-averse? Bold? Somewhere in between? It’s important to know where you fall on that spectrum to determine how much gold is best for you.

The Balance Issue

Finally, remember that for most people the most important investment approach as they approach retirement is to achieve something that represents balance for you.

Gold is an excellent diversification investment if that’s a key part of your strategy, and generally speaking you should use gold as a counterbalance against the riskier elements of your portfolio.

It’s also important to remember that sometimes the most important part of your retirement strategy when it comes to gold is to simply act.

Staying on the sidelines is a passive strategy in and of itself, which is fine if your overall financial position is secure, but if you don’t make a move when your instincts say you should you could end up losing out on some potentially excellent returns from investing in gold.