Arriving at retirement prepared and settled does not happen by accident or casually. Almost always, those who arrive in retirement well-prepared have spent decades working on their financial plan and having their investments work with/for them. By understanding just the basics of compound return, investors are excited and motivated to start saving early. If you have never examined the math of what you need to save for each million you want to have in retirement, you should consult a financial advisor or tinker with a retirement calculator. The point is that the younger you start investing the more that money can work for/with you, compounding and compounding while you continue to contribute as much as possible/necessary, while still living a life you love.
If you are not working on a financial plan, contributing what you can and having it wisely invested, what are you doing? We view that as an important question because all too often people choke on their answer, usually because they have no plan or accountability to their financial plan.
We help our clients build substantial assets with modest contributions each year! Together, we build a solid foundation backed by wise investment philosophies—like leveraging tax-advantaged accounts, regularly funding retirement accounts, investing academically, rebalancing, tax loss harvesting and deploying tax strategies; it’s these sorts of moves in a financial plan that propel high-net-worth individuals (HNWIs) toward a life of prosperity.
At Tencap Wealth Coaching, we understand the complexities of building wealth and offer tailored solutions to ensure a prosperous retirement. We analyze your financial standing and then help chart a comfortable life in your golden years through high-net-worth retirement planning strategies.
How is Retirement Planning Different for HNW Individuals?
Retirement planning for HNWIs significantly differs from the average retirement strategy due to the complexity and scale of their financial situations. HNWIs often max out their tax-deferred retirement accounts early, which lets them explore additional investment vehicles like real estate and private equity to grow wealth further.
They also typically explore tax optimizations or reductions. HNWIs participate in tax-loss harvesting, charitable giving, and tax-efficient investment vehicles to ensure the IRS doesn’t chip away at their nest egg.
Additionally, HNWIs focus on comprehensive estate planning to manage applicable taxes, ensure the seamless transfer of assets, and protect the financial legacy for future generations. Trusts and charitable foundations help preserve wealth while fulfilling philanthropic goals for HNWIs.
8 Retirement Planning Strategies for HNWIs
Your golden years should be the best and most comfortable in your life. Here are some ways you can achieve a high net worth in retirement.
1. Start your lifestyle and legacy planning as early as now
Don’t wait until retirement is around the corner. Visualize your ideal retirement lifestyle—like your travel plans, hobbies, and philanthropic intentions—as early as possible and estimate their costs.
For example, if you wish to support certain charities or leave a significant inheritance to your children, outline these goals early. Proactive planning lets you make informed decisions and adjustments to stay on track.
2. Create a retirement income and withdrawal plan
Having a substantial nest egg is great, but it’s crucial to understand how you can convert that wealth into sustainable income throughout retirement.
Your withdrawal strategy must factor in your desired lifestyle, taxes, and potential inflation. One thing you can do is withdraw from your individual retirement account (IRA) at the lowest tax rate before your social security payments start. You can also delay your social security until the maximum age for higher benefits.
3. Diversify your investment portfolio
Financial experts advise against putting all your eggs in one basket, as an investment portfolio with a mix of asset classes—stocks, bonds, and real estate—can help mitigate risk and ensure long-term growth. You can also explore options beyond traditional assets, like venture capital or private equity, for potentially higher returns.
4. Optimize your retirement accounts
Max out your contributions to tax-advantaged accounts like IRAs and 401(k)s to benefit from tax deductions and tax-deferred growth.
Specifically, you can explore Roth IRAs, which offer tax-free withdrawals in retirement. You pay taxes on your contributions now, allowing your investments to grow tax-free. This option is beneficial if you expect to be in a higher tax bracket later. Plus, Roth IRAs don’t have required minimum distributions, giving you more flexibility.
5. Establish a trust and other asset protection policies
As an HNWI, protecting your wealth for yourself and future generations is crucial. One option is to set up a trust fund, which may include money, property, stocks, bonds, and other assets. It can help minimize estate taxes, manage assets for your beneficiaries, and protect your valuables from potential creditors or lawsuits.
Aside from a trust fund, you can also avail of an insurance policy or transfer assets to a limited liability company (LLC) so you can separate them from your personal property while protecting them from creditors.
6. Don’t forget about long-term healthcare plans
Your healthcare needs will increase as you age, so planning for medical expenses in retirement is essential. Factor in potential long-term care needs and explore options like long-term care insurance or planning for self-insured care expenses.
You can also apply for a health savings account (HSA), which compounds your or your employer’s contributions without taxes while helping pay for your medical, dental, and vision expenses.
Moreover, you can apply for Medicare’s retirement coverage, but it may not cover all your medical costs. Plus, you need to sign up for it on time to receive full benefits.
7. Retire in an LCOL area
Areas with a lower cost of living (LCOL) can reduce your housing, tax, and daily living expenses. One place you can settle in is Utah. It has low taxation rates, allowing you to maximize your retirement savings. The Beehive State also offers a robust healthcare system with top-class hospitals and numerous rebates and tax credits for retirees.
8. Consult a financial advisor
A financial advisor specializing in HNWIs can provide personalized strategies and expert advice. These professionals help navigate complex financial landscapes, optimize investments, and design comprehensive and effective retirement plans. Your financial advisor can assist in estate planning, tax optimization, and investment diversification to meet your retirement goals.
Craft Your Dream Retirement
Retirement planning for HNWIs is far from the traditional one-size-fits-all approach. Besides leveraging your high income as a head start, you must be strategic as you plan for a rewarding and fulfilling retirement. Every week I meet with people who come into my office and tell me what they have been doing to save for retirement. While every effort is valuable, I don’t think I have ever met with someone who was maximizing every intelligent strategy. Working with a financial planner allows an HNWI to leverage a professional who can really optimize every angle and strategy. This produces a massive lift in a financial plan and helps to build and secure wealth!
At Tencap, you can tap into our extensive experience guiding HNWIs toward a secure and prosperous retirement. We specialize in offering comprehensive and personalized advisory services so you can fully enjoy your golden years. We will help you accumulate, preserve, and spend your money.
Schedule a consultation today to kickstart your financial plan and start working towards financial independence! Let’s get you to a place where you can retire, from there, you can decide when you want to retire! There is a big difference between the two.
Joe Griffin
Joe has been building and managing financial planning firms for the past 14 years. He loves the financial planning space and is very proud of the success and growth that has come from his proprietary marketing and leadership. Joe spent years being involved with the bright minds of the investment committee at Utah’s 529 college savings plan – a plan managing over 20 billion. Joe only works with firms that are stated fiduciaries on a client relationship. Joe is committed to leading a financial planning firm with ethics and integrity. The money management philosophy that Tencap subscribes to is built on strong academics and is supported by a highly impressive academic board. We can't wait to coach you on the excellence that Tencap stands for.
