3 Steps to a High-Net Worth Retirement

Leo Maheras |

Saving for a high-net-worth retirement is not always an easy process, but necessary if an investor with a high-net-worth wishes to enjoy the same lifestyle they were accustomed to while they were working. So how does one maintain their wealth so that they might live the life they desire once they hit retirement age? A few simple steps may help make the process a little easier. 

Know the Things That Are Not Controllable, and the Ones That Are

Many investors put a lot of their attention on various stock projections, rates of return, and information on the ideal funds to place their money. In general most of these things are impossible to control even if provided with solid information. So instead of focusing time and energy on the things that cannot be controlled, it is more ideal to know and focus on the items that they are able to control, such as:

  • The Amount of Money That is Spent: All investors have control over the amount of money they spend outside of basic bills. Making careful decisions regarding large purchases is key to growing wealth.
  • The Amount of Money Saved: As with spending, the amount saved is controllable as well and by choosing the proper amount to save may put an investor in a better financial position. 

Properly Time Major Distributions

There may come a time when a major distribution is required for a significant expense such as college, vehicles, or property. By planning ahead and knowing when these large distributions may need to be made an investor will have better control over their end retirement goals. Determine if it is a good time to pull out the money or if it should be delayed based on your retirement plan before taking a distribution. In some instances, it may be better to wait or take the money out in smaller increments, such as paying for college semester by semester. 

Understand the Context With Risk Tolerance

Much of a financial plan is developed based around an investor's risk tolerance. But risk tolerance without the context surrounding it means little and may often lead to a sense of insecurity. While risk tolerance is linked to both short and long term financial goals, simply going with a gut feeling on how much risk an investor is willing to take could lead to less security and disappointment. Instead one should understand that while high volatility means higher possible reward, it also means uncertainty in retirement, where low-risk investments often provide greater stability. Each investor should create their own context based on their stage in life and lifestyle to help them develop a strategy that provides them with the mix of high and low risk that they feel is tolerable going into their retirement years. 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.



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