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  • Mike Komara

The Guide to a Healthy Retirement for High-Net-Worth Individuals

Updated: Sep 14

High-net-worth individuals can make some important decisions now to prepare for retirement. Retirement can mean a major shift in income, without a regular salary coming in every year.

Fortunately, planning for retirement does not need to be stressful. It’s about understanding your assets and your future needs and setting goals that will guide your retirement activity.

Here are a few ideas for creating a sound and secure retirement plan:

1. Select the Best Tax Options

Taxes are an important consideration when it comes to choosing where to put your investments. You want a broad tax diversification strategy that takes into account the following:

  • Holdings you’re required to pay annual income tax on

  • Holdings you pay taxes on only when you make a withdrawal or distribution

  • Holdings you rarely if ever have to pay taxes on

One consideration about taxes is location. Seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – do not tax retirement income. Others only tax dividends and interest.

2. Maximize Retirement Plan Contributions

Maximizing your contributions to workplace retirement plans such as 401(k)s or 403(b)s lets you build up your savings now. For 2021, the maximum allowed contribution is $19,500. If you’re over 50, you have more opportunity to save by adding $6,500 in catch-up contributions.

Keep in mind that if you are a highly compensated employee, there are limits on how much you can contribute once you exceed a level of earnings for the year. In addition, remember that the maximum total employer and employee contributions for 2021 is $58,000 (excluding catch-up contributions).

3. Consider Social Security

If it’s possible to delay payouts from Social Security, you’ll be able to take larger monthly distributions in the future. Claiming benefits starting at age 62 instead of at 66 will lock in those monthly rates for the rest of your life. If you can wait until age 70, you’ll earn an extra 8 percent annually.

Also, remember that if you delay Social Security benefits until age 65, you may still need to apply for Medicare benefits within three months of that birthday to escape paying larger lifetime premiums for Medicare Parts B and D.

4. Consider Inflation

While the United States has had a relatively low rate of inflation in recent years, 2021 is showing us the risk of inflationary price increases. You need to assume an average rate of inflation, say 3 percent annually, and project out what that would mean for your income and expenses when you retire.

5. Factor in Long-Term Care Insurance

The reality is that as we age, we are more susceptible to illnesses. While it’s good news that life expectancy in the United States continues to grow, not all of us will have good health as we age. If you can afford long-term care insurance, it’s a prudent investment that will not eat away your hard-earned resources. Long-term care insurance covers items that health insurance does not, such as assistance with daily tasks and costs of chronic medical conditions.

6. Develop a Comprehensive Financial Plan

Planning for the future means considering your wants and needs in the coming years. A comprehensive financial plan can help you manage your assets today and in the future. It lets you map out any testamentary provisions you have for children, grandchildren, or favorite charities, while also allowing you to fully understand your investments and risks.

7. Pick the Right Advisors

You’ve worked hard for what you have. When thinking about retirement, you need a trusted financial advisor to help you consider options, make plans, and track progress.

High-net-worth individuals often have complex financial matters. Working with experienced wealth advisors helps ensure that your assets are protected, your wealth is preserved and that your investments are monitored and modified to meet your goals.

When you want sound, measured investment advice and expert insights into your retirement planning, contact Solas Wealth.