Navigating Retirement as a High-Net-Worth Individual SHP Financial

High-net-worth individuals (HNWI) and families have unique needs when it comes to retirement planning. HNWIs have considerable holdings, often from diverse income streams, and at least $1 million in liquid or investible assets. These may include stocks, bonds, mutual funds, real estate, businesses, and other investments. For these individuals, wealth management is more complex. A financial advisor who understands the tax implications and intricacies of retirement planning for HNWIs can maximize the advantages and manage the risk of their assets. Here are some considerations for wealthy individuals preparing for retirement.   

Review the holistic financial picture

High-income earners grapple with how to make their money last. The possibility of outliving savings is a concern for all those preparing for retirement, especially with longer life spans and high inflation. But, HNWI’s accumulated wealth carries higher risk and tax liabilities than the average saver. They should develop strategies to minimize their tax payments and create a comprehensive plan of all facets of their financial picture. This will allow them to achieve several financial objectives, which include stretching those sums. A complete financial evaluation encompasses the following:

  • Tax analysis
  • Portfolio review and financial planning
  • Investment management
  • Retirement planning
  • Budget creation
  • Insurance analysis
  • Estate planning
  • College funding
  • Charitable giving
  • Executive compensation – stock options, deferred compensation, etc. 

Rebalance portfolio investments 

Financial advisors suggest regular portfolio check-ups, maintenance, and adjustments for anyone planning for retirement. Because of their substantial gains, the wealthy also have more to lose. Portfolio tune-ups will ensure HNWIs have a healthy mix of cash, stocks, bonds, and risk in relation to their age. 

Max out retirement plans

According to Empower, a digital wealth management company, retirement accounts comprise 55% of the wealth in millionaire portfolios. Those with 401(k) accounts earn compound interest on both initial investment and gains, and contributions also grow tax-deferred and reduce taxable income. Max retirement account contributions benefit anyone regardless of financial standing, even if you are a HNWI that doesn’t qualify for a tax deduction. High-income earners who exceed Roth IRA income limits can open a “Backdoor Roth IRA.” In this situation, HNWIs contribute to a traditional IRA and convert it to a Roth IRA. Contributions are post-tax, withdrawals are tax-free, and there are no required minimum distributions. 

Employ tax-efficient strategies

Tax codes can hit high-income earners where it hurts. HNWIs can reduce their tax burden in several ways, which include maxing retirement accounts, such as:

  • Holding assets to achieve long-term capital gains rates.
  • Starting a business to write off expenses
  • Contributing to a Health Savings Account (HSA)
  • Investing in tax-free or tax-deferred assets such as municipal bonds and annuities
  • Smoothing income (using generally accepted accounting principles—GAAP)
  • Lumping deductions in alternating years

Trusts and charitable giving are other vehicles to maximize tax outcomes for HNWIs. Wealthy individuals should always consult a financial advisor to help them navigate the complexities of tax planning and minimize their burden.

Preserve wealth and protect assets

Careful estate planning and safeguarding assets through insurance coverage and legal trusts can ensure a smooth transfer of wealth for HNWI’s beneficiaries. Trusts are common among estate planners to control asset distribution, reduce the taxable estate, and protect privacy by avoiding the probate process when assets are allocated. Life insurance trusts can cover estate taxes, and charitable remainder trusts allow HNWIs to reap tax benefits while funding philanthropies.

Select a qualified financial advisor

The complexities of HNW wealth management require an experienced financial advisor. High-earning individuals should not try to manage their assets alone, even if they feel confident in their ability. The benefits of partnering with a qualified advisor include personalized investment strategy, current and professional insights into tax optimization, risk management, and other complex financial matters, plus ongoing portfolio maintenance. The advisor should serve as a fiduciary, a legally defined obligation and certification that requires the advisor to act on their client’s behalf when offering financial advice. They should also have access to a team of diversified specialists that can help with complex situations. Finally, the compensation method should factor into advisor selection. Commission incentivizes advisors to make transactions that may not be in the client’s best interests. High-income earners should work with fee-only advisors.

The strategies used to earn wealth can differ from those that retain it. Protecting wealth to earn on investments applies to anyone planning for their retirement. Because of the higher risk associated with HNWI portfolios, a move in the wrong direction can mean thousands or more. The right advisor will ensure that high-income earners make informed tax and investment decisions so they retire comfortably and continue to live in style.

If you or your family have a high net worth and want a complimentary review and quality advising services from SHP Financial, Click HERE.



The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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