Navigating Retirement Readiness: The Importance of Wealth Preservation Management

If your retirement is on the horizon, and you want to secure the comfortable future you’ve been dreaming of, now is the time to get serious about incorporating wealth preservation into your overall retirement plan. 

A recent report by the Center for Retirement Research at Boston College reveals a startling trend: more than a quarter of all U.S. households, particularly those with high income, risk underestimating their financial needs in retirement, and 32% of high-income households are "not worried enough" about their retirement risk.

In this blog, we will cover topics to help you avoid financial shortfalls during your golden years. Here’s what you need to know.

The Importance of HNWI’s Retirement Security

While many Americans believe they are well-prepared to maintain their living standards in retirement, the reality is different. Only 19 percent of U.S. households correctly recognize the risk of falling short in retirement. Overconfidence can lead to inadequate planning, resulting in financial shortfalls during retirement.

Wealth is more than money in the bank; it represents the culmination of hard work, smart decisions, and generations of perseverance. However, with great wealth comes significant responsibility, especially when preserving it for the future. From securing your legacy for future generations to optimizing your investments, this is where wealth preservation can be a great tool in long-term financial planning. 

Wealth preservation management focuses on protecting your hard-earned capital to help it remain a reliable source in retirement. Through wealth preservation, you can create a customized strategy tailored to your financial situation and goals. This strategy should address your risk tolerance, income needs, and time horizon while considering potential financial risks and uncertainties. Let's explore some essential tips for high-net-worth retirement security.

Having a Retirement Tax Strategy

Wealthy individuals planning for retirement can significantly benefit from a well-thought-out tax strategy. Understanding tax-efficient withdrawal strategies is crucial for optimizing your financial outlook in retirement. As 2024 approaches, let's take a look at the expected contribution limits for 2024:

  • 401(k) Plans: The contribution limit for 401(k) plans is projected to increase to $23,000 in 2024, up from $22,500 in 2023. For those aged 50 and older, an additional catch-up contribution of $7,500 will remain the same. It's important to note that these new amounts apply to 403(b) and most 457 plans.
  • IRA Contribution Limits: Individual Retirement Accounts (IRAs) are another popular retirement savings option. The contribution limits are to remain relatively stable for IRAs. For 2024, individuals under 50 can contribute up to $7,000, up from $6,500 in 2023. Catch-up contributions for adults 50 and older will remain at $1,000.
  • Roth IRA Contribution Limits: Beginning in 2024, more Americans will qualify for Roth IRA contributions, with the AGI range rising between $146,000-$161,000 for single filers, up from $138,000-$153,000 in 2023. The Roth IRA contribution phaseout for married couples filing together will rise to between $230,000 and $240,000 in 2024, up from between $218,000 and $228,000.

By staying informed about these tax strategies and leveraging available incentives, HNWIs can help maximize their after-tax income for a financially secure retirement.

Preserving Wealth in Retirement

Retirement planning involves more than just accumulating savings; it's about effectively managing risks to help ensure your financial security and peace of mind during retirement. When protecting your wealth in retirement, high-net-worth individuals face unique challenges and opportunities. Consider these tips to help mitigate risks:

  • Stay diversified: A great way to protect your investment portfolio is to have exposure to stocks, bonds, and international markets in an asset allocation plan that makes sense for your risk tolerance and goals. Bonds can provide stability during downturns, and international exposure can give you access to markets that may generate positive performance where others are falling.  
  • Make Educated Decisions: Making decisions based on a recent market event usually results in an emotionally driven mistake. It’s more beneficial to make calculated and educated decisions than to be reactive.  
  • Control What You Can: Extravagant lifestyle expenses eat into your returns. This is a particularly painful realization when stock markets are correcting. If and when the market takes a downturn, evaluate your current spending habits to gain control of your income/outgoing ratio.
  • Revisit Your Asset Allocation: A disciplined approach to investing and rebalancing as needed can help you pursue your goals in up — and down — markets. 

How a Wealth Preservation Manager Can Help

The help of a wealth preservation manager — preferably a fiduciary — becomes increasingly vital on your retirement journey. Wealth preservation managers are financial professionals with experience in helping individuals maintain and grow their wealth over time, focusing on preparing for a carefree retirement. Here are some ways a wealth manager can help:

Our dedicated team at NJM Wealth Preservation Strategies possesses a deep understanding of the intricacies of planning for retirement, especially those with substantial wealth to optimize. We tailor comprehensive plans that align with your unique goals and risk tolerance. Our purpose is to help you make informed decisions, refine your portfolio, and navigate the complexities of the financial market; ultimately helping you achieve your long-term wealth objectives. 

Life is dynamic; your financial circumstances, goals, and priorities may change. Regularly reviewing your retirement plan with NJM can help you to adapt to these changes so that your financial strategy remains on track.

Final Thoughts

Retirement is a time for celebration. It's the end of your working life, and you've earned this time of rest and relaxation. By taking proactive steps now, you can avoid the pitfalls of wealth overestimation and establish a solid foundation for your financial future, and your family’s legacy.

More from NJM Wealth Preservation Strategies 

While these tips are just a few of the many money-saving strategies you can apply to your situation, having the help of a true & trusted fiduciary is key to retiring wealthy.

At NJM Wealth Preservation Strategies, we strategize on crafting the perfect retirement plan that meets your needs. We will work with you to create an action plan that helps you get the most out of your savings while preparing for an enjoyable retirement.

Retirement planning requires some forward-thinking, and it’s never too early or too late to start. For more information on our services, schedule a call with us today.