Affluent individuals tend to focus on creating retirement income through multiple sources. This allows them to afford the luxurious life they are currently living even after they retire. At Pillar Wealth Management, we offer wealth management and retirement planning services to high net worth and ultra-high net worth individuals having a net worth of 5 million to 500 million dollars in liquid assets. We can help you create a customized plan that gives you financial security in your retirement.If you would like to get started,call us to schedule your first consultation.
Getting Started on Retirement Money Management
It is necessary to think about how you will manage your time and money after you retire. In some cases, you might have goals that you want to achieve. You might want to travel more, start a new hobby, work with non-profit organizations, donate more to charity, renovate your dream house, or simply enjoy the luxuries you have now.
Retirement money management allows you to secure your financial status and sustain your wealth to support your and your family’s living standards. That being said, not everything will go your way. If you don’t manage your money, income drainers can affect your saving and deplete them sooner than you think. We understand that managing a large fortune can be an insurmountable task. Fortunately, our wealth managers are experienced enough to handle multiple high-value assets.Get in touch with our team for your first meeting.
Why Do You Need a Retirement Plan?
High-spending lifestyles are difficult to maintain without an active income. After all, you want to prioritize spending on yourself. It is much easier to spend freely when you have a good grip on yourretirement money management.
It is natural to worry about concerns that come with your eventual retirement. If you have a plan drafted with the help of a professional can ease many of your worries and greatly reduce the chances of those concerns becoming a reality. Here are the primary aspects that necessitate retirees to have a retirement plan.
Even a net worth of millions of dollars doesn’t immunize you from the threat of running out of money. Retirees are reliant on their savings to keep themselves afloat, and these savings can be drained in a number of ways.
Inflation is something you might overlook. The inflation rate in the U.S. was1.7%at the end of February 2021, as per the U.S. Labor Department. It is safe to say that you can expect this value to increase even after your retirement age.
Economic downturns and other unforeseen circumstances can end up increasing your expenses far beyond what you initially planned for. Therefore, a financial advisor or wealth manager is useful in helping to adjust your retirement plan with life changes.
Liabilities and Threats
Wealthy families are constantly at risk of being taken advantage of for their money. Whether from external factors, disgruntled employees, business partners, unprofessional financial advisors or brokers, and even family members, your wealth can suffer the consequences.
Even after you retire, you can’t predict your life changes. Lawsuits, liabilities, divorce, or ill-advised investment decisions can end up costing you a charge chunk of your savings. Our book,The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million, talks more about the threats the wealthy families face.
Creating a retirement plan helps you prepare for these threats, especially when you have an expert watching out for your financial health. They can recommend insurance policies that protect your savings from being expended.
Health issues are inevitable with age. Even if you consider yourself physically healthy, accidents, injuries, and diseases are unpredictable. If you don’t plan for your post-retirement medical expenses, you could find yourself bankrupt sooner than you think.
Medical procedures, expensive medicines, disabilities, full-time caretakers, and doctor visits can eat away your savings. By planning for your retirement, you can use medical and life insurance policies to make sure that your medical expenses won’t affect your retirement savings.
Even after retiring, you might have children or family members who are financially dependent on you. In such cases, you’ll have to use your savings to pay for their expenses, whether education, weddings, or more.
A retirement plan can help you arrange a passive source of income by investing in certain assets. The earlier you start planning, the easier it will be for you to organize sufficient funds for your family’s financial stability without compromising your financial status.
What are Your Sources of Retirement Income?
When searching for retirement options, you might have heard about different retirement accounts, i.e., the 401(k), social security, pensions, etc. As a high net worth or ultra-high net worth investor, you understand the gravity of making the right decision. Hence, you might be wondering, “What is the safest place to put retirement money?”
Many rich individuals have a plan to focus on creating retirement income to keep the cash coming in even when you don’t have an active income. If you have more than 10 million dollars at stake, you can benefit from the advice of an expert. They can help you identify and analyze potential income sources for your retirement plan.You can learn more about finding the best financial advisor for your unique monetary needs in ourUltimate Guide to Choosing the Best Financial Advisor for Families worth $5 Million to $500 Million.
Here are some retirement income sources that you could consider:
High net worth and ultra-high net worth individuals have numerous equities in their name, which can act as a source of retirement income. For example, if you have substantial home equity, you can consider downsizing after your retirement to free up some cash. Alternatively, a reverse mortgage is a strategic move that allows you to borrow money against your home’s value. However, you need to weigh the risks before you make any big decisions.
Some wealthy investors have businesses that they can sell to convert into retirement income. In this case, you’ll have to consider the tax impact it brings and how your business partners or shareholders will be compensated.For this reason, it is best to consult a wealth manager regarding financial decisions.You can talk with our wealth management team to ask about an array of financial matters.
An inheritance can bring a significant influx of cash into your savings. However, it also comes with taxes. If you want to leave an inheritance for future generations, it will also affect your retirement income. In either case, you can use the help of a financial expert who can create a retirement plan that can integrate your revenue needs with a future inheritance.
Social Security benefits are calculated after accounting for your 35 highest-earning years. However, there are uncertainties about how Social Security will be able to support generations in the long-term. The benefits received from Social Security are funded, administered, and taxed in a particular way. Policy changes can affect your long-term retirement income picture, forcing many retirees to depend on more than one source of retirement income.
Pensions are a great income source entitled to a few people. Pension payment provision plans are changing all the time, with each company coming up with varying policies. For example, you need to clarify with your company whether or not your pension will increase with inflation and how it will be calculated.
There are two types of pensions, single annuity or a joint and survivor annuity. A single annuity provides benefits until the worker passes, while a joint and survivor annuity offers reduced profits until the survivor passes. A retirement plan can help you understand which decision to make.
Retirement Savings or Investments
When you retire, you’ll tap into the savings in your retirement accounts,whether IRAs, 401(k)s, or other taxable accounts. Converting these into an ongoing income can require some planning since each way has tax consequences that you should be aware of. You can opt for periodic withdrawals, selecting an annuity, or allocate more assets to income-generating investments.
With a retirement plan, you can invest in securities that provide a monthly income or periodic returns based on their performance. Investment managers or wealth managers can use strategies to maximize the profits you gain from your investments. Some of these are mentioned in our5 Shifts Guide – 5 Critical Shifts For Maximizing Portfolio Growth Strategies – For Families Worth $5 Million To $500 Millions.
Some retirees wish to work part-time or as freelance workers even after they retire. Others prefer pursuing a new business venture. When you have an active income, there is less strain on your savings, and you can contribute more to them. Working with companies can also offer you insurance benefits.
For example, some companies have a phased retirement program that allows you to receive your pension when you reach your retirement age; meanwhile, you continue to work as a part-time employee.
Wealthy investors are also more likely to have multiple investments that act as an alternative source of income even after retirement. If you have a high net worth and are committed to enhancing your investment performance, we strongly commend this Performance Guide – Improving Portfolio Performance: The Shifts Multi-Millionaires Must Make to Achieve Financial Security and Serenity.
Retirement Planning Services at Pillar Wealth Management
When you have worked hard all your life to build a fortune, you want to enjoy the liberty of spending it how you want. A well-rounded retirement plan can allow you to prioritize spending on yourself as you won’t need to worry about whether or not you’ll have enough money to sustain yourself once you stop working. The right financial advisor will help you through the retirement money management process, but as a wealthy investor, you understand that you must be cautious about who you trust your finances to. OurUltimate Guide to Choosing the Best Financial Advisor for Families worth $5 Million to $500 Millioncan tell you all you need to know.
At Pillar Wealth Management, we have created an exclusive, 100% customized retirement planning process that answers your questions about retirement with definitive, precise, and clear numerical projections and hard data. We have worked with clients with 5 million to 500 million dollars in liquid investments for over six decades.Schedule your first free session with one of our proficient wealth managers.
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.
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- Focus on starting today. ...
- Contribute to your 401(k) account. ...
- Meet your employer's match. ...
- Open an IRA. ...
- Take advantage of catch-up contributions if you're age 50 or older. ...
- Automate your savings. ...
- Rein in spending. ...
- Set a goal.
How the 4% Rule Works. The 4% rule is easy to follow. In the first year of retirement, you can withdraw up to 4% of your portfolio's value. If you have $1 million saved for retirement, for example, you could spend $40,000 in the first year of retirement following the 4% rule.What are 5 key tips for retirement savings? ›
- Monitor your investments in pre-retirement. Money needed 5-10 years into retirement is most vulnerable, so avoid overspending. ...
- Plan for inflation as a fact of life. ...
- Talk with your spouse or significant other about retirement spending. ...
- Focus on physical health.
- Be Tax Efficient with Withdrawals. ...
- Focus on Creating Retirement Income. ...
- Make Trade Offs — Know What is Important to You. ...
- Prioritize Spending on Yourself. ...
- Look at Your Home Equity. ...
- Wait as Long as Possible to Start Social Security. ...
- Be Prepared for Spending Shifts.
- Quitting Your Job. ...
- Not Saving Now. ...
- Not Having a Financial Plan. ...
- Not Maxing out a Company Match. ...
- Investing Unwisely. ...
- Not Rebalancing Your Portfolio. ...
- Poor Tax Planning. ...
- Cashing out Savings.
According to an AgeWave study, more than 80% of today's retirees say health is the most important ingredient for a happy retirement, meaning that the majority value good health even over financial security.What are the 3 buckets for money for retirement? ›
Divide your retirement portfolio into three buckets. The first bucket is used to fund day-to-day living expenses. The third bucket is used to fund longevity. The middle bucket is the go-between or transfer place to refill bucket number #1 as it is depleted.What is a good monthly retirement income? ›
A good retirement income is about 80% of your pre-retirement income before leaving the workforce. For example, if your pre-retirement income is $5,000 you should aim to have a $4,000 retirement income.What is the 60 40 rule for retirement? ›
Retirement planners typically tell Americans to invest 60% of their retirement funds in stocks and 40% in bonds. But that time-tested strategy fell apart this year as poor performance in many financial markets wiped out many workers' savings.What should I tap first in retirement? ›
Withdraw funds from taxable investment accounts first to take advantage of lower (dividend and capital gains) tax rates. Next, take funds from tax-free investment accounts, followed by tax-deferred accounts such as 401(k)s, 403(b)s, and traditional IRAs.
- Traditional Retirement. Traditional retirement is just that. ...
- Semi-Retirement. ...
- Temporary Retirement. ...
- Other Considerations.
The 70 part of the 70/30 rule refers to what you do with 70% of your net income every month. That means if you receive $6,000 per month, you would take 70% of that, or $4,200, and use that to cover all of your expenses.What is the 100 rule for retirement? ›
According to this principle, individuals should hold a percentage of stocks equal to 100 minus their age. So, for a typical 60-year-old, 40% of the portfolio should be equities. The rest would comprise high-grade bonds, government debt, and other relatively safe assets.Where should seniors put their money? ›
- 60/40 portfolio.
- Bond ladders.
- Certificates of deposit (CDs).
- Options collar.
- Low-volatility stocks.
- Series I savings bonds.
- Preferred stock.
Despite the ability to access retirement accounts, many experts recommend that retirees keep enough cash on hand to cover between six and twelve months of daily living expenses. Some even suggest keeping up to three years' worth of living expenses in cash. Your emergency fund must be easy for you to access at any time.What are the 7 crucial mistakes of retirement planning? ›
- Taking Social Security Before 70.
- Borrowing Against Your Retirement (Unless It's an Emergency)
- Tapping Into Your 401(k) or IRA Before RMDs.
- Tapping Into Your Roth Before Exhausting Other Options.
- Hiring an Advisor Who Is Not a Fiduciary.
- #1 Excercise and monitor your health.
- #2 Keep in touch with close friends and family.
- #3 Work on your passive income streams.
- #4 Spend some time outside.
- #5 Budget your retirement income so you don't run out of money.
- #6 Volunteer – give back to the community.
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.What is the hardest thing about retirement? ›
For many people, the hardest tasks in retirement are establishing a structure and personal relationships to replace what they had in their work environments. Work dictated the structure of their days and weeks for decades. In retirement, that structure has to be replaced.What are the top 10 things people do when they retire? ›
- #1 Declutter your home and free your mind. ...
- #2 Explore your local area. ...
- #3 Become a tour guide. ...
- #4 Work for wildlife. ...
- #5 Research your family tree. ...
- #6 Dress the part. ...
- #7 Get musical. ...
- #8 Learn to dance.
Older people, in particular, may enjoy a greater sense of well-being because of the availability of Social Security and private pension benefits that provide them with income after they retire. For many retirees, pensions provide a significant percentage of income in retirement.What is the 80 rule for retirement? ›
What is the Rule of 80? This provision creates a so-called Rule of 80, a new definition of Normal Retirement for members of the Hybrid Defined Benefit Component. This allows members to claim a full, unreduced pension benefit if their combined age and years of service equal at least 80, beginning at age 50.How much money should a 65 year old have to retire? ›
Retirement experts have offered various rules of thumb about how much you need to save: somewhere near $1 million, 80% to 90% of your annual pre-retirement income, 12 times your pre-retirement salary.What is the 75 rule for retirement? ›
You are eligible to receive retiree benefits if you meet the “Rule of 75”. This rule states that you must be a minimum of 55 years of age and have a minimum of 10 years of continuous full-time service; if you meet both minimums, then the total of your age and years of service must equal at least 75.What is the average retirement income in 2022? ›
Average Household Retirement Income 2022:
Median Income – $46,360 (down from $56,632 in 2019) Mean Income – $71,446 (down from $84,153 in 2019)
For those who are collecting Social Security at age 65, the average payment in 2022 is about $2,484 a month, according to the Social Security Administration.What is the average 401K balance for a 65 year old? ›
Average 401k by Age (Vanguard)
|AGE||AVERAGE 401K BALANCE||MEDIAN 401K BALANCE|
How much retirement should I have at 60? A general rule for retirement savings by age 60 is to aim to have about seven to eight times your current salary saved up. This means someone earning $75,000 a year would ideally have between $525,000 to $600,000 in retirement savings at that age.What is the rule of 88 for retirement? ›
Any participant who retires from active employment on or after age fifty-five (55) and before age fifty-eight (58), whose combined age and years of vesting service then equals at least eighty-eight (88), shall be entitled to a monthly pension before the participant's normal retirement date, and the amount thereof shall ...What is the 25 times rule for retirement? ›
The 25x Rule is simply an estimate of how much you'll need to have saved for retirement. You take the amount you want to spend each year in retirement and multiply it by 25. Generally, you can look at your current salary to get an idea of how much you might be able to comfortably live off in retirement.
In order to guarantee that the benefits of IRAs are used solely for retirement, the IRS imposes age limits on these accounts. Unless users are willing to incur a 10% penalty, IRA assets are not accessible until age 59 and a half.What is the best first step to prepare for retirement? ›
- Start saving, keep saving, and stick to.
- Know your retirement needs. ...
- Contribute to your employer's retirement.
- Learn about your employer's pension plan. ...
- Consider basic investment principles. ...
- Don't touch your retirement savings. ...
- Ask your employer to start a plan. ...
- Put money into an Individual Retirement.
- Stage 1: Pre-retirement.
- Stage 2: The honeymoon phase.
- Stage 3: Disenchantment.
- Stage 4: Re-orientation and finding yourself.
- Stage 5: Stability.
The only mention of retirement in the Bible is for the Levites who were instructed to withdraw from service in the tent of meeting. This passage includes instruction for the Levites in both service and retirement from their duties, and it captures the essence of instruction to retired Christians.What are the five emotional stages of retirement? ›
- Realisation. When your retirement date arrives and you're ready to realise your retirement plan, you're likely to feel mixed emotions. ...
- Honeymoon period. ...
- Disenchantment. ...
- Reorientation. ...
How the 70/20/10 Budget Rule Works. Following the 70/20/10 rule of budgeting, you separate your take-home pay into three buckets based on a specific percentage. Seventy percent of your income will go to monthly bills and everyday spending, 20% goes to saving and investing and 10% goes to debt repayment or donation.What is the 50 40 rule? ›
On each day of the plan year, a defined benefit plan must benefit the lesser of: 50 employees of the employer, or. the greater of: 40 percent of all employees of the employer, or. 2 employees (or if there is only 1 employee, such employee).What are Dave Ramsey's rules? ›
- Step 1: Start an Emergency Fund. ...
- Step 2: Focus on Debts. ...
- Step 3: Complete Your Emergency Fund. ...
- Step 4: Save for Retirement. ...
- Step 5: Save for College Funds. ...
- Step 6: Pay Off Your House.
The rule of 70 is a calculation to determine how many years it'll take for your money or an investment to double given a specified rate of return. Investors can use this metric to evaluate various investments including mutual fund returns and the growth rate for a retirement portfolio.What is a good asset allocation for a 70 year old? ›
If you're 70, you should keep 30% of your portfolio in stocks. However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age.
With U.S. stocks down about 19% and bonds down 15% so far in 2022, this search for a seemingly elusive bottom can be exhausting. But we continue to encourage investors to remain patient and avoid chasing index-level bear-market rallies.Where should I put money at 65? ›
Retirement investments will vary depending on the person's financial profile, family situation, and needs. Some good investments for retirement are defined contribution plans, such as 401(k)s and 403(b)s, traditional IRAs and Roth IRAs, cash-value life insurance plans, and guaranteed income annuities.What is the safest investment with the highest return? ›
- Certificates of deposit.
- Money market accounts.
- Treasury bonds.
- Treasury Inflation-Protected Securities.
- Municipal bonds.
- Corporate bonds.
- S&P 500 index fund/ETF.
- Dividend stocks.
According to the Social Security Administration, the average monthly Social Security benefit for retired workers in July 2021 was only $1,556.72.What is the ideal net worth at retirement? ›
One formula suggests that your net worth at age 70 should be 20 times your annual spending. Marotta recommends following a savings plan that will result in a net worth that is 20 times annual spending by age 72. 3 Under this plan, the older you get, the more you save.How much money does the average retired person live on? ›
Average Retirement Income in 2021. According to U.S. Census Bureau data, the median average retirement income for retirees 65 and older is $47,357. The average mean retirement income is $73,228.How much cash does the average retiree have? ›
According to Northwestern Mutual's 2021 Planning & Progress Study, there are signs that Americans may be increasing their personal savings. The average personal savings increased by 10%: from $65,900 in 2020 to $73,100 in 2021. Likewise, the average retirement savings increased by 13%: from $87,500 to $98,800.Where should you put your money to ensure a nice retirement? ›
The safest place to put your retirement funds is in low-risk investments and savings options with guaranteed growth. Low-risk investments and savings options include fixed annuities, savings accounts, CDs, treasury securities, and money market accounts. Of these, fixed annuities usually provide the best interest rates.How Much Should Retirees hold in cash? ›
Despite the ability to access retirement accounts, many experts recommend that retirees keep enough cash on hand to cover between six and twelve months of daily living expenses. Some even suggest keeping up to three years' worth of living expenses in cash. Your emergency fund must be easy for you to access at any time.How do I know if I have enough money to retire? ›
At age 30, some financial professionals suggest accumulating the equivalent of your current annual income. By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10-12 times your income at that time to be reasonably confident that you'll have enough funds.
The rule of thumb assumes a retiree will need about 80% of their annual pre-retirement income (annual salary) to maintain a similar standard of living after retirement. Because investing involves risk, the 4% Rule withdrawal strategy does not work for everyone.What money should be used first in retirement? ›
The first places you should generally withdraw from are your taxable brokerage accounts—your least tax-efficient accounts subject to capital gains and dividend taxes. By using these first, you give your tax-advantaged accounts (IRA, Roth IRA) more time to grow and compound.What retirees do all day? ›
The study showed that those in retirement spent less time on things like working, educational activities, and caring for others like their children. They spent more time on things like personal care, eating, household activities, shopping, leisure, civic activities and talking on the phone.Where do most people put their retirement savings? ›
The most common form of retirement savings are defined contribution pensions, like 401(k)s and 403(b)s. Over half of Americans have an account like this. And 36% have an individual retirement account (IRA), a similar type of retirement investment account.What does the average 65 year old have in retirement savings? ›
Average savings: The average savings for those 55-65 is $197,322, and the average for those over 65 is $216,720. Your "official" retirement age is usually defined by when you're eligible to receive full Social Security benefits.How much does the average retiree need per month? ›
Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.What does the average person have in their retirement account? ›
On average, Americans have around $141,542 saved up for retirement, according to the “How America Saves 2022” report compiled by Vanguard, an investment firm that represents more than 30 million investors. However, most people likely have much less: The median 401(k) balance is just $35,345.What happens to senior citizens when they run out of money? ›
Exactly what happens to elderly adults with no money? In most states, Medicaid will pay for a nursing home for up to 100 days. But the grim reality is that elderly folks who run out of funding in an assisted living facility will get evicted. That's a common experience and a potentially traumatic one.How much do I need to retire on $80000 a year? ›
Using the default assumptions built into the Moneysmart Retirement Calculator – and assuming you are single, will retire at age 65, want the funds to last until age 90, and require an annual income of $80,000 (indexed up each year for inflation) – then you need approximately $1,550,000 by retirement to live on an ...How much money should you have to retire at 55? ›
Experts say to have at least seven times your salary saved at age 55. That means if you make $55,000 a year, you should have at least $385,000 saved for retirement.
Many experts say your annual retirement income should be 70 percent to 80 percent of your final pre-retirement salary. So, if you make $80,000 when you leave the workforce, you'll need at least $56,000 for each year you plan to spend in retirement.What percentage of retirees have a million dollars? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor.