5 High Net Worth Retirement Planning Mistakes to Avoid
Today, there is a high number of retirement planning advice readily available online and in other media. But most of it isn’t geared towards high net worth individuals. Proper retirement planning is very crucial since it only takes one or two mistakes to go from financial independence to broken dreams.
Many studies have shown that about half of all retirees will have no choice but to alter their lifestyle significantly due to unforeseen financial issues. While it’s a disturbing fact, the good news is that with a better retirement plan, you can prevent this headache. One of the best ways to achieve success is to avoid big mistakes. Here is a list of five mistakes to avoid for high net worth individuals:
1. Negligent Investment Management
Rich individuals have the money, but they commonly lack control over where that money gets invested and this can be costly in the long run. Having a well-diversified portfolio will ensure you get the best possible return with less risk to overcome the changes of both up and down markets.
Are you aware of the expected return on your invested assets? What is the risk level of that investment? If you don’t know the answer to these questions, it might be a good idea to hire a financial planner. They can better manage your assets based on your objectives and goals, providing a higher chance for you to reach to long-term goals.
2. Neglecting Tax Diversification
Tax later, tax now or tax never? Which choice is best in helping you reach your retirement goals? Many retirees are pleasantly surprised when they hit 70, begin taking their withdrawals and discover their tax bills all of the sudden grow a lot higher. The reason for that is the money they withdraw from their retirement accounts for living expenses is considered federal taxable income.
And it’s common for them to be taxed at their highest tax bracket. 401(k)s and IRAs can help in saving on taxed during the contribution phase, but in return, you pay a big price during your retirement years when you begin to withdraw. A better, tax-efficient solution is to invest in vehicles like Roth IRAs. Roth 401(k)s and Insurance products which enable you to enjoy a valuable stream of tax-free income when you retire.
3. Clinging to Traditional Strategies
There are more options than just IRAs, 401(k)s, and Roths when planning your retirement. It’s highly recommended for wealthy investors to include alternative investment products into their high net worth retirement planning to gain an advantage of extra benefits, such as:
Stop Loss Guarantees. For example, through indexed products, your portfolio will participate in up markets, but won’t go below zero. With a floor of 0% and a ceiling of 12%, your assets can provide a better overall return than if you completely overexpose yourself without these limits.
Tax-Free Withdrawals. Alternative investments could offer tax-free withdrawals and tax-free growth. You can earn many hundreds of thousands of dollars more when paying for tax upfront and then have life-long tax-free withdrawals.
Flexibility for Your Money. Alternative investments provide wealthy individuals increased flexibility in terms of how much you’re able to take out and when. Certain products have no IRS penalty to gain access to funds before the age of 59. You can use these funds for a college education without the IRS requirement to withdraw these funds at the age of 70.
4. Underestimating Longevity
According to the latest statistics, people are now living longer, but most still don’t prepare for it financially. For example, if you plan to live to 85, but end up living to 95, your savings will come up short. It’s much better to plan for 95, if you only live till 85, you will spend that time living more comfortably and have something left to pass on.
5. No Second Opinion
If you feel that your financial planner isn’t adding the necessary value to your financial investments, or if it’s been over twelve months since you had a financial review, you should consider a Portfolio Second Opinion. Even if you don’t want to switch advisors, getting a Second Portfolio Opinion lets you see if there are better opportunities to position your savings and investments. Having more information and a better understanding of your goals will help you determine if your current financial plan is on target.
As the weather starts getting warmer, every family anticipates time spent together enjoying summer activities. Not sure how to entertain your family this summer? Here are five great ideas to bring your family together during this fun time of year.
There are many businesses that design and print invitations, however, if you want to give them your touch, you can do them on your own and we assure you that in addition to looking good, you will not spend as much money. Here are some suggestions so you can make some amazing invitations.
Moving out is exciting – finally having your own home comes with independence but also a lot you need to organise. Transporting your furniture to the flat, buying new goods, and potentially renovating bits and pieces here and there can be quite time-consuming.
In the UK Winter officially lasts from the 22nd of December 2019 to the 20th of March 2020, however, if you live in the UK, then you will know that winter tends to feel like it lasts much longer than that. We can be experiencing winter weather anywhere from October through to April or May.
The moving process comes with overwhelming choices like which property agent to choose, which house to purchase, which furniture to take and which one to discard, do it yourself or hire the expert movers of a nearby moving company, and others.
If you are planning to move, one of the things you may be considering is moving to a new area. There are all sorts of reasons why people decide to relocate, such as employment opportunities, moving closer to family and friends, or just to escape the area they currently live in.
The kitchen is an important part of our home and that’s why it should be perfect in every sense. You have to take care of its looks and functions. When you decide to upgrade your kitchen into something modular, you have to keep some important points in mind.