A High Net Worth Guide to Secure Your Retirement
When you’ve spent your life building wealth, transitioning from work to retirement can feel overwhelming. At Peace of Mind Wealth Management, we specialize in financial planning for retirement, and through our years of experience, we’ve seen what works—and what doesn’t—when preparing for this major life milestone. In this retirement planning guide, we’ll explore the key strategies high net worth individuals should consider, including managing sequence of returns risk, structuring your retirement investment strategy, planning for long-term care, and optimizing retirement withdrawal strategies.
So, whether you’re wondering “is it time to retire?” or trying to decide “when should I retire?“, this comprehensive guide will walk you through what it takes to secure your retirement.
The Shift From Work to Wealth
For many high-net-worth individuals, the hardest part of retirement isn’t financial—it’s emotional. After decades of saving, shifting from earning a paycheck to relying on your wealth can feel uncertain. The fear of running out of money or not having enough for the lifestyle you envisioned is real, but with the right strategy, it doesn’t have to define your retirement.
Along with the fear of running out of money comes questions like:
- What if the market crashes early in my retirement?
- How can I protect my wealth from unexpected downturns?
- What’s the best way to create income in retirement?
- How do I protect myself from rising costs like healthcare and inflation?
These concerns are valid. Fortunately, there are proven strategies to protect against these risks.
Managing Sequence of Returns Risk
One of the most significant but least understood dangers to high net worth retirement is sequence of returns risk. This risk refers to the impact that the timing of poor market returns can have on your retirement savings, especially when you’re making regular withdrawals.
Consider this: Two retirees each start with $1 million. They withdraw the same amount annually and average the same return over a decade. But one retiree experiences negative returns in the early years of retirement, while the other experiences those negative returns later. Even with the same average return, the retiree who faced early losses may run out of money much faster.
This is why managing sequence of returns risk is critical. Having a retirement investment strategy that prepares for market downturns from the start helps protect your assets, ensuring you can keep paying yourself for decades to come.
The Three Bucket Strategy: Building a Solid Investment Foundation
To mitigate sequence of returns risk and stabilize your retirement income, we often recommend the Three Bucket Strategy. This retirement investment strategy divides your assets into three distinct categories:
- Cash Bucket: This is your easily accessible money. It’s held in high-yield savings or money market accounts and is designed to cover emergencies and short-term expenses. For some, this might be $20,000. For others, several hundred thousand dollars. The right amount depends on your comfort level and cash flow needs.
- Safety and Income Bucket: Designed to provide predictable income with limited or no market risk, this bucket covers your essential expenses. The goal is to generate a stable return—typically in the 4% to 8% range—to fund your retirement withdrawal strategies without worrying about market volatility.
- Growth Bucket: This is your long-term growth engine. Invested in the market through stocks, ETFs, and alternatives, this bucket is meant to outpace inflation and support your financial needs 10, 20, or even 30 years into retirement.
By strategically allocating your assets into these buckets, you create a system where your essential income is protected while your long-term assets continue to grow.
Long-Term Care Planning for High Net Worth Individuals
Another major concern for retirees is long-term care. Costs for assisted living, nursing homes, and in-home care have risen dramatically and show no signs of slowing down. For high net worth individuals, long-term care planning is essential—not just to cover costs, but to protect your estate from being drained by healthcare expenses.
We work with our clients to create long-term care planning solutions that align with their overall retirement income planning goals. This may include hybrid long-term care insurance, self-funding strategies, or incorporating long-term care costs into the safety bucket of the Three Bucket Strategy.
Tax Strategies in Retirement
A major piece of risk management for high net worth individuals is managing taxes. Many retirees hold significant assets in pre-tax accounts like 401(k)s and IRAs. Without proper tax strategies in retirement, you may pay far more than necessary in taxes over your lifetime.
Tax planning should be integrated into your retirement checklist and considered before you retire. Strategies may include:
- Roth conversions during lower income years
- Tax-efficient withdrawal strategies
- Managing Required Minimum Distributions (RMDs)
- Coordinating Social Security and pension income with other taxable income
Crafting Your Peace of Mind Pathway
At Peace of Mind Wealth Management, our process for planning retirement revolves around what we call the Peace of Mind Pathway. Think of it as a GPS for your retirement journey. We help you define where you are today, where you want to go, and how to navigate the bumps along the way.
The Peace of Mind Pathway has three key phases:
- Roadmap: We analyze your current financial picture, define your retirement goals, and identify the best path forward.
- Implementation: We put your custom plan into action, from investment adjustments to cash flow planning and risk management.
- Nurture: We continue monitoring your plan, adjusting as life changes, tax laws shift, and markets evolve.
This process ensures your plan is not only set up correctly but remains optimized for your evolving needs.
Is It Time to Retire? How to Know You’re Ready
Whether you’re five years away from retirement or contemplating if now is the time, having a clear plan is essential. High net worth individuals have more moving parts in their retirement strategies, which means more opportunities—but also more complexity. The earlier you start planning, the more options you have to protect and grow your wealth.
At the end of the day, retiring comfortably isn’t about hitting a magic number. It’s about having a strategic plan that provides reliable income, protects your lifestyle, and gives you peace of mind.
To learn more, read the article “Is It Time to Retire? Key Considerations”.
Ready to Secure Your Retirement?
By building a thoughtful plan that includes strategies for retirement income planning, risk management, long-term care planning, and tax strategies in retirement, you’ll be well on your way to retiring comfortably and living the life you’ve worked so hard to create
Schedule your complimentary 15 minute call with us if you have any questions about A High Net Worth Guide To Secure Your Retirement.