28-Point Checklist for High-Net-Worth Retirement Planning


Being a high-net-worth individual comes with many benefits, comfort, financial security, and peace of mind. Irrespective of whether you have been working hard to become a high-net-worth individual or were born to privilege, conserving your wealth is essential. Retirement can be harsh if you do not plan for it efficiently. The transition can be harder for high-net-worth individuals, as they may be used to a certain lifestyle. Maintaining the same can be difficult, if you do not plan in advance.

Retirement planning for high-net-worth individuals can be a complex process. It can include a number of things, right from succession planning to estate planning, budgeting, and more. The larger the estate, the tougher it can be to manage it. Taxes can also be high when your retirement income is on the higher end. Therefore, it is important to navigate through all these issues and devise a strategy that offers you a steady flow of income to support your preferred lifestyle. If you are a high-net-worth individual and need help with devising a well-planned strategy for securing your retirement years, it is advised you consult with a professional financial advisor who can guide you on the same.  If you are nearing retirement, you may want to check the following points to make sure that you are on the right path. These 29 points can help you with high-net-worth retirement planning so you can enjoy the retirement you always hoped for.

High-net-worth retirement planning checklist

Know your incomes

1. Check your bank and other savings accounts:

You can start the process by going through all your savings accounts, such as certificates of deposits, bank accounts, money market accounts, etc., and see how much money you own in each. These savings may not fetch you a lot of returns. However, they are low-risk and can provide you with financial stability in retirement. Moreover, getting an idea of how much you hold in each of your savings accounts can help you plan your retirement accordingly.

2. Check your Roth retirement accounts:

Roth Individual Retirement Account (IRA) and Roth 401(k) can be two of your most dependable sources of income in retirement. The primary reason for this is the ability to make tax-free withdrawals. Roth accounts are not taxed in retirement. Instead, you contribute to them through your after-tax dollars. So the tax liabilities are taken care of in your pre-retirement years. As long as you make withdrawals after the age of 59.5 and five years after opening the account, you can make tax-free and penalty-free withdrawals in retirement. Knowing the amount of money you have in your Roth accounts will help you understand your tax-free income options for retirement.

3. Go through your traditional IRAs and 401ks

Retirement planning for high-net-worth individuals may not always include options like the IRAs and 401ks. However, a lot of investors become millionaires through these traditional accounts also. So, if you fall into this category, you may want to pay some attention to these accounts before you retire. Traditional retirement accounts are subject to taxes on withdrawals in retirement. They also have Required Minimum Distributions (RMDs) from the age of 72. So, keep an eye on your balance and plan the withdrawals in advance, in a way that triggers the least tax liabilities. If you fail to make RMDs, the Internal Revenue Service (IRS) would levy a 10% penalty. So, have a withdrawal strategy in place to avoid these extra expenses.

4. Business net value

If you run a business, you should plan business succession well in time before retirement. You may pass on your business to your future generations, appoint new leaders from within the company, or sell it. Make sure to weigh all the pros and cons and then make a decision.

5. Real estate net value

Real estate is an excellent financial asset. If you own residential or commercial properties, make sure you understand their net values. If you are using these assets to generate income through rent or lease, get an estimate of the same. This can be a good source of income in retirement, so understanding its potential is essential.

6. Health Savings Accounts (HSA)

HSAs offer great financial assistance to cover your health-related costs. Being a tax-advantaged account, HSA can also help you save money. Distributions made from an HSA are tax and penalty-free as long as they are used for qualified medical expenses. So, make sure you know what these are before you retire and use your account effectively.

7. Stock options

If you own stocks, you may want to sell them to earn a profit. Stocks can be risky, so keeping a high allocation of stocks may not be advised in retirement. You can talk to your financial advisor about retirement planning high-net-worth and devise a plan to lower stock allocation, switch to debt, and sell your stocks. Keep in mind that selling your stocks will trigger tax implications. So, try to work the best possible plan with your wealth manager or financial advisor.

8. Collectible and other high-value assets

Paintings, vintage cars, jewelry, and other similar items are an important part of your estate. Collector items can sell for thousands of dollars. So, it is important to know their true relevance and worth. You can use your collectibles in a financial emergency. You can also pass it down to your future generations in your estate. Understanding their value can help you make the right decisions on how you wish to use them.

9. Social Security benefits

Although not likely to be the primary foundation for your income, Social Security benefits can still be a dependable source of money in retirement. Social Security benefits can be further enhanced if you delay your withdrawals. Every month that you delay claiming your benefits, increases the check by a certain percentage. For instance, if you claim your benefits at the age of 67, you can get a 108% increase in your benefit. If you delay it up to the age of 70, this can be increased to 132%. As a high-net-worth individual, you will have several other incomes in retirement. So, you can easily delay your benefits and claim a bigger check later.

10. Pensions

If you have a pension fund, make sure you know the withdrawal rules. Also, take a look at the account balance to understand how long it can last you. If you have worked with multiple companies, you may have more than one pension account. Check all these accounts and then jot down their combined worth for more clarity.

11. Life insurance

Life insurance is an excellent financial security tool for your loved ones. Life insurance payouts are tax-free and can help a grieving family. If you have a life insurance plan, go through its rules, inclusions, and exclusions. Extend the term if needed to offer your family uninterrupted protection.

Know your expenses

12. Travel expenses

You may travel a lot in retirement. This could be for pleasure or work. Retirement is all about enjoying your golden years, and spontaneity can be a great part of that. If you are a frequent traveler, you will likely continue doing so in the future. Make sure that you account for these expenses and plan accordingly.

13. Divorce-related costs

If you are divorced, you may owe alimony to your spouse. Make sure to add this expense when using the high-net-worth retirement calculator to ascertain your future needs.

14. Charities

Charities can be a great way to lower your tax liabilities. They can help you carry on your philanthropic endeavors, and at the same time, use your high-net-worth for something productive. You can speak to your financial advisor to get a better idea of how to plan your charities in retirement.

15. Day to day expenses

Life continues after retirement and so do your expenses. Daily expenditure like fuel, groceries, water, clothing and more will account for the maximum part of your post-retirement expenses. As a high-net-worth individual, your lifestyle needs could be more elaborate than others. You can spend on relatively expensive brands. You may also need to spend on other supplementary necessities like security systems. Retirement planning for high-net-worth individuals is vital for planning such expenses.

16. Financial assistance to children and grandchildren

It is wise to save some part of your wealth for your children and grandchildren as they may require financial help from time to time. This could be for education, starting a business, buying a house, getting out of debt, and other similar needs. You could also talk to your children and grandchildren before to understand their needs and save accordingly.

17. Estate planning

The bigger the estate, the more complex it can be to plan for. Having said this, it is essential to plan your estate to protect your hard-earned money. You can take help from a wealth manager and devise a plan to distribute your wealth among your spouse and children in your will. You may also require a trust, power of attorneys, and health directives.

Know your debt

18. Car loans

If you have any pending car loans, make sure to get rid of them before retirement. Carrying on debt in retirement can be hard on your lifestyle.

19. Home mortgage

Check if you have any mortgage. This can be a considerable expense in retirement. Try to get rid of it as soon as you can. It may also be advised to postpone retirement if you are not able to pay your mortgage.

20. Business debt

If you plan to sell your business, you must take care of its debt first. Pending debt can make it harder to find buyers. On the other hand, if you wish to keep your business, the business debt will accompany you into retirement as well. So, ensure that you fully know where you stand.

21. Personal debt scenarios

Personal debt, such as co-signing a student loan with a child, borrowing money from peers or family, credit card dues, etc., are all likely to interfere with your retirement lifestyle. So, make sure you eliminate them.

Plan the future

22. Plan your withdrawals

Your withdrawals should last you a lifetime. If you take out all your money in the initial years of retirement, you would have to live frugally later. So, be smart about your withdrawals and plan them in advance to not go overboard when time comes.

23. Understand the tax repercussions

Tax can be a major concern in retirement planning for high-net-worth individuals. The higher your income, the more tax you end up paying. So, be careful and aware of your tax implications and find ways to lower them. You may look for states that have low taxes for retirees. You may use lifetime gift exemptions to avoid estate tax. There are several strategies and you can choose the one that works best for you.

24. Have a long-term care plan

As you grow old, your health will be impacted. So, make sure you have a long-term care plan in place. Long-term care insurance is a must. You can also talk to your children if they would be willing to care for you. If not, you can arrange for an at-home caretaker or sign up for a facility.

25. Create a budget

Budgeting is essential at every stage of life and more so in retirement. Your income sources are limited as a retiree. So, keeping a budget and sticking to it will ensure that you do not outlive your savings.

26. Have an emergency fund

An emergency can strike when you least expect it. So, make sure to have enough savings in an emergency fund that can be easily and quickly accessed in your hour of need.

27. Avoid further debt

Try to avoid any form of debt in retirement, even credit cards if possible. Debt can erode your savings and add to the financial stress that can be hard to deal with when you are not working.

28. Enjoy your retirement

The last but most important point on the high-net-worth retirement planning checklist is to enjoy your retirement. You spend your entire life working and earning money. Your golden years are meant for relaxation, travel, and general merriment. So, make the most of your opportunities and live a happy life.

To summarize

Retirement planning for high-net-worth individuals can be streamlined and made easy with this checklist. Remember to follow these points and prepare for your retirement well in advance. A careful evaluation of all your income sources, expenses, debts, and more will help you be ready for what is in store in the future. It will also remove the element of surprise.

For additional information on how you can effectively plan for your retirement, visit Dash Investments or email me directly at dash@dashinvestments.com.