5 High Net Worth Retirement Planning Ideas

5 High Net Worth Retirement Planning Ideas

21 Sep 2022

Retirement planning is an important part of comprehensive financial planning for every person. For the affluent, the stakes are even higher, but there is good news: There are multiple ways to make sure you are optimizing your post-work life and minimizing any financial stressors that might come up. 

With this in mind, we have compiled a list of seven high-net-worth retirement planning ideas. These insights should help you make as certain as possible that yours will be a retirement worth looking forward to.

We answer these questions (and more) below:

  • What’s involved in planning an affluent retirement?
  • Could long-term care eventually diminish your nest egg?
  • How could estate planning ensure your family’s legacy?
  • Is your asset allocation configured for withstanding inflation?

Much To Look Forward To

If you are nearing retirement age, congratulations! With the next chapter of your life approaching, there are many different considerations to make. In particular, having the proper protections in place is an absolute must. Ensuring these begins with asking yourself some questions:

  • What are my goals for retirement? Are there any dreams or aspirations that have eluded you in life thus far; things that would be within reach if only you had the time and resources to pursue them? It is important to keep these in mind as we work toward the goal of creating an ideal retiree’s lifestyle for you.
  • What are my risk tolerance levels? A big part of planning for retirement is ensuring that you won’t run out of money before reaching it. One way to ensure this is by considering how much risk (or uncertainty) is comfortable for you when investing those savings into investments like stocks and bonds. These assets may go up or down over time, depending on the market conditions at any given moment.
  • How might I expand my current savings? Are there tax-advantaged accounts such as IRAs and 401(k)s that might benefit from being converted into RMDs after age 70½? Are my taxes planned long-term well enough to reduce my capital gains?

1. Prepare Financial Protection

With regard to your financial future, insurance is one of the most important areas we must cover. It is essential for everyone—but there are specific policies with the potential to apply most beneficially to high-net-worth individuals.

  • Life Insurance. We all want our loved ones protected after we are gone. Many people only get life insurance when they have children or a spouse who relies on their income. Nevertheless, there are many other reasons why you may need coverage as well. For example, if you run a business where someone else relies on your income, it would also be wise for this person(s) to get coverage. This can provide a safeguard in case something happens out of their control (such as an illness).
  • Disability Insurance. If you are a high-income earner, disability insurance can be crucial to your financial stability. In fact, if you are self-employed or lack access to an employer-sponsored policy, you might want to consider buying high-net-worth disability insurance on top of any other disability coverage you have. Affluent people can be more likely than others to need this because they often have greater responsibilities and obligations (such as caring for children).
  • Long-term care. This type of policy covers services such as home health aides or nursing homes—and helps cover (the sometimes considerable) expenses resulting from these types of services. Generally, speaking, they cover 100% of all eligible expenses up until you reach age 65.


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2. Considered Your Estate Planning

Once your retirement income and healthcare needs are covered, it is time to turn your attention to estate planning. This is the process of creating an instruction manual for how you would like your assets managed after your death. It includes savings, portfolio, real estate (e.g., homes), and intangible assets, such as art or jewelry collections.

Estate planning can also help preserve your financial legacy for your descendants. For example, it could include setting up trusts for children who are minors. Similarly, it can entail trusts for adult children who may not be able to manage their own finances due to disabilities, mental illness, or other issues.

3. Review Your Asset Allocation & Risk Tolerance

Your asset allocation and risk tolerance are interconnected, so it is important to consider both factors in tandem. First of all, your asset allocation refers to how you divide your portfolio’s equity between different investments. For example, imagine that you have $1 million invested in stocks, $500,000 invested in bonds, and $250,000 invested in cash equivalents (such as money market accounts). Our full-cycle approach to investing can help you optimize yours.

Next, your risk tolerance refers specifically to how much volatility you are willing to weather when investing your money. Someone with a low tolerance cannot stand seeing their stock portfolios drop 20% before recovering. Meanwhile, someone with a high tolerance may not care about fluctuations in day-to-day performance so long as they continue making progress toward long-term financial goals over time.

4. Tap Into Tax-Advantaged Savings

The tax benefits of a Roth IRA and traditional 529 plan make them attractive retirement savings options for many HNWs. Meanwhile, there are other tax-advantaged options that can help you save for other goals. For instance, traditional IRAs and HSAs can be used advantageously, as well. 

At the same time, the single most important factor in tax planning may be a long-term approach. While some savings may be possible within a given year, your maximum potential savings are normally only possible over multiple years (or better yet, decades). In fact, the longer the period over which we plan your taxes, the greater your potential reduction of things like capital gains liability. 

5. Consider Your Long-term Monetary Needs

5 piggy banks stacked on rising amounts of coins representing financial planning in ohio

You may also want to consider how long you think it will take for your investment strategy to grow and become sufficient enough to provide the income you would prefer. It may be prudent to factor in how much inflation will affect the amount of money necessary to maintain your desired lifestyle, as well.

A good way of estimating how much money may be required is by developing a budget that factors in all necessary expenses (e.g., your housing and food), subtracting any potential savings or income sources, and then dividing the result by 12 months. This can give an estimate of how much you need to save per month in order to allow your nest egg to grow while staying ahead of inflation. 

Retirement is an exciting time, but it can also be a very stressful one. You may have worked hard to build up your nest egg and now you want nothing more than to enjoy the fruits of your labor. However, things ranging from possible health issues to unforeseen emergencies make it important to prepare yourself for anything that comes along the way.

If you would like to learn more about the many options available, McGervey Wealth Management can answer your questions. Some say we might be the best fiduciary financial advisor Akron-Canton, OH has to offer. Contact us today.

More About the Author: Michael McGervey

Michael serves as a resource to executives and business owners, assisting them in making proactive and informed personal financial decisions. He is also a member of McGervey Wealth Management’s Investment Committee and is responsible for investment research as well as the execution of the firm’s portfolio strategies.