The Confidence Paradox: How Self-Directed IRAs Could Bridge the Gap 

Many investors say they feel confident about retirement. But when you look more closely, that confidence is not always backed by a clear plan.

A 2025 survey from Prudential found that 89 percent of wealthy individuals in the US believe they will be able to cover essential retirement expenses. However, only about one-third have a formal or complete written plan, and just 25 percent have a defined withdrawal approach.

That gap between confidence and preparation may be more common than expected.

What is the confidence paradox in retirement?

The confidence paradox refers to the gap between how prepared investors believe they are and the actual planning they’ve done.

This disconnect can lead to last-minute decisions, uncertainty around income, and overlooked risks such as inflation or healthcare costs. Fifty-five percent of respondents said they had not accounted for inflation in their retirement planning, and 52% had not accounted for potential healthcare costs

While confidence is a valuable starting point, planning is what turns that confidence into a secure retirement.

Some investors are already closing the gap

While many people delay retirement decisions until later in life, others are taking steps sooner. They may not have a formal plan, but they’re thinking more intentionally about how their savings will support future income, what risks they may face, and how they’ll access different assets over time.

That future-focused mindset tends to develop when someone is more directly involved in their investments, especially when those assets require hands-on decisions about income or timing.

This kind of early engagement often marks the beginning stages of retirement planning. It may start with setting goals, exploring timelines, or simply getting clearer about how different pieces of their financial picture fit together.

Planning ahead is especially important for investors who are focused on building a diversified portfolio to support long-term retirement goals.

How self-directed investing fits in retirement planning

One way investors can pursue diversification is by expanding beyond traditional market-based assets. This is where self-directed retirement accounts can offer additional flexibility and choice.

Self-directed retirement accounts allow individuals to invest in assets beyond traditional stocks and mutual funds, such as real estate, private lending, or private equity. Because these investments often involve timelines, income streams, or exit planning, they naturally prompt earlier engagement.

For example, someone investing in rental real estate may already be thinking about how that property will generate income. An investor overseeing a private lending deal may already be tracking distribution schedules or considering tax implications, both of which are questions that directly inform retirement planning.

This connection means self-directed investors often consider broader retirement questions in advance: where funds will come from, how liquid each asset is, and what timing makes sense for selling or withdrawing.

Turning savings into a retirement plan

Retirement planning often begins by identifying how savings will be converted into usable income. Traditional investors may not face this decision until retirement is near. In contrast, self-directed investors often address these questions well in advance.

Directing alternative assets involves more than just growth. It includes understanding lease terms, distribution schedules, maturity dates, and liquidity timelines. These operational details naturally translate into retirement income planning because you’re already managing the mechanics of how your investments produce returns.

Some people use AI tools or retirement calculators to explore different scenarios. These can provide helpful insights, but they are not a replacement for comprehensive planning or professional advice. AI is simply a tool. It is important to do your own research and make decisions based on your specific situation and goals.

Taking the next step

The Prudential survey reveals a pattern: high confidence, but limited concrete planning around income timing, inflation, and healthcare costs. Planning doesn’t always mean having every detail figured out, but it does mean taking a closer look at how your investments connect to your future income.

For those exploring a more hands-on approach, self-directed retirement accounts may offer more flexibility to align investments with long-term goals. Before making any decisions about your retirement, it’s important to consult with a financial advisor or professional.

Want to talk through what that could look like for your situation? Schedule a call with an IRA Counselor.

Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

Equity Trust Company does not recommend or endorse any third-party AI tools, platforms, or technologies, and does not endorse their use for making financial, investment, or account-related decisions. Any mention of, or links to, such tools in this article is for informational purposes only. We encourage readers to independently verify information and seek advice from licensed professionals.