The Complete Guide to What We Do
Planning for retirementis not a spur of the moment decision. It is a lifelong process, and the sooner you start preparing for it, the better. For high net worth investors seeking wealth management, Lubbock, there are plenty of things that contribute to a smooth retirement. If you are an ultra-high net worth investor with liquid assets of $10 million and above, then we strongly recommend you seek help from a professional wealth advisor for comprehensive retirement and wealth management planning. Even if you are currently working with a high-profile investment bank or Wall Street broker, there may be room for improvement. To learn more about this, click here to read our free guide to choosing a financial advisor for high net worth investors with more than $10 million in liquid assets.
At Pillar Wealth Management, we offer comprehensive wealth advisory services that include developing alternative wealth management strategies, financial planning, estate planning, tax planning, insurance planning, and asset and investment planning. Our financial advisors offer over 60 years of combined experience in all aspects of wealth management. If you are an investor with a net worth between $5 million to $500 million in liquid assets, we can help you optimize your wealth management strategy to ensure you have everything you need to retire securely. Click here to book a free consultation with us.
Table of Contents
- 1. Setting Income Goals
- 2. Identifying Income Sources
- 3. Planning for Taxes
- 4. Creating a Budget
- 5. Planning for a Smooth Transition and Succession for Your Business
- 6. Diversifying Your Assets for Optimal Wealth Management, Lubbock
- 7. Rebalancing Your Portfolio
- 8. Preparing A More Accurate Estimate For Longevity
- Wrapping It Up
In this blog, we will be discussing some of the most important aspects of retirement and wealth management planning. Let’s start.
1. Setting Income Goals
The first thing you need to ask yourself when planning for retirement is this: What will your source of income be when you retire? As a high net worth individual, you will require a sizable sum every month to live your life comfortably. Determining how much money you need is one of the first steps to a successful retirement.
Unfortunately, many investment brokers and banks don’t focus on this aspect. They might draw up elaborate strategies for you, without accounting for your income goals. It may sound impressive initially, but if you are unable to generate stable monthly returns, all that effort will be for naught. You need to discuss your goals with your financial advisor Lubbock and make sure they prioritize them for optimal wealth management.
2. Identifying Income Sources
Once you have decided upon your income goals, you also need to figure out how you will generate the said amount. Typically, most retired individuals can generate income through the following sources:
- Certificate of deposits
- Cash accounts
- Social security
- Real estate investments
We suggest collaborating with your financial advisor to create an accurate model of all your income sources. This can offer more clarity on how much money you can safely withdraw from your savings and investment portfolio every month without compromising your financial security.
Deciding which sources will help you reach your retirement goals without exposing yourself to an unnecessary amount of risk should be the next thing on your agenda. Consult your financial advisor and ask them about the risk-return ratio of your current investment portfolio. As is often the case, many banks and investment brokers focus on generating high returns without accounting for risk. This type of high-risk investment strategy might work well for you when you are in your 20s or 30s, but as you grow older, you need to be a bit more conservative.
Working with a wealth management firm that can help you modify your asset and investment planning strategy to suit your current risk appetite can resolve this issue.
3. Planning for Taxes
Simply focusing on a stable income source isn’t enough. You also need to control your costs and strike the right balance between your earnings and expenditures. This doesn’t mean you should tamp down on all your luxuries. Yes, you may have to reorganize your priorities a bit once you retire. However, there are other avenues for cost control that you can opt for. One of these is tax payments.
If you don’t keep an eye on these payments, you could lose a substantial amount of your retirement income to taxes every year. Unlike regular wage earners, high net worth individuals pay a lot more in taxes. According to a 2019 report by the Congressional Budget Office, the top 1% of American families earn an average of $1.8 million every year. These households also account for 25% of total federal tax payments annually, which is significantly higher than what other households pay.
The good news? There are plenty of ways to limit your tax payments. As a qualified wealth advisor will tell you, how you minimize your tax payments and maximize tax benefits can make a huge difference. At Pillar Wealth Management, we take a highly strategic approach to tax minimization. Frankly, our wealth managers are obsessed with helping you reduce your taxes wherever possible.
Some of the standard tax planning strategies we utilize include:
- Controlling your short-term capital gains
- Investing in stable, long-term assets
- Creating defined-benefit plans
- Strategically selling long-term assets to offset capital losses
To learn more about the tax minimization strategies we use and how they help with wealth management, Lubbock, click here to read our exclusive guide on improving portfolio performance for high net worth investors.
4. Creating a Budget
All retirees need to prepare a budget for their retirement.NASDAQ recommends that you build a budget by considering your annual income before retirement and subtracting 25% from this amount. This can allow you to control your expenditures and be more disciplined.
If you are looking to control your expenditures, we suggest eliminating unnecessary expenses, such as having a second or third home, having extra cars, or engaging in high-cost leisure activities. Remember, your primary goal here is to make your wealth last, so a little discipline will go a long way in minimizing your stress.
You can work with your wealth manager to create a retirement budget based on your monthly income and expenditures and see how this works out for you in the first year. Based on whether the budget suits your lifestyle, you can make some tweaks and have your wealth manager optimize it further. To learn how to choose the right wealth manager for retirement planning, click here to read our guide.
5. Planning for a Smooth Transition and Succession for Your Business
If you are a high net worth business owner, you also need to account forbusiness transition planning before you retire. This can have substantial implications for your wealth and taxes. Our advice? Don’t wait until the last few years before you retire to have a robust business transition and succession plan in place. This is even more important if you are planning to transfer your business to your family members.
Let us review the top 5 things you should discuss with your financial advisor when drawing up a transition plan:
- Ownership structure – This involves discussing who will assume ownership, how the transition will take place, and the structuring of the ownership.
- Tax planning – Business transitions tend to have a variety of tax implications for a business. You should discuss how this affects your business, the new shareholders, and what can be done to lower tax costs.
- Estate planning – This is another critical aspect of business transition planning. Many high net worth business owners do not account for their business assets when carrying out estate planning. They focus more on personal assets instead. If something happens to you, your business assets could be mismanaged, which can create problems for your family, so make sure your financial advisors cover this aspect in your estate plans.
- Identifying a successor – If your business is being transferred to someone within the family, you can also discuss a potential successor who can continue running it.
- Personal finance – This relates to discussing a sale price that will help you meet your future needs.
A successful business transition will mean that you can retire comfortably while ensuring that your business is in good hands. To learn more about business succession planning, get in touch with our team at Pillar Wealth Management.
6. Diversifying Your Assets for Optimal Wealth Management, Lubbock
Retirement doesn’t have to be the end of the road for you. As mentioned earlier, you can always invest in assets that help you generate a stable source of income and ensure sustainability. The assets you select are critical. At Pillar Wealth Management, we constantly emphasize on asset allocation and diversification when discussing asset and investment planning. This is closely related to your risk. If you have highly concentrated assets, your risk will increase.
To avoid this, we review the income goals of our clients and their risk appetite. We then suggest diversifying their assets using municipal bonds, taxable bonds, equities, real estate, cash accounts, and more.
A diversified portfolio automatically reduces your risk and helps you make the most of market trends without forsaking your financial serenity. Since assets such as cash, equities, and bonds move in different directions, you can be assured that your portfolio is not incurring heavy losses due to a sudden dip in the market.
To learn more about the benefits of diversified portfolio investments, we suggest you order a free hardcover copy of our book The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
7. Rebalancing Your Portfolio
Choosing an appropriate asset allocation isn’t a one-time thing. Your wealth manager must keep revisiting your assets, analyzing their performance, and rebalancing your portfolio when required. This lets you prepare for changes in the market and improve the performance of your portfolio. A balanced portfolio will make sure your investment offers optimal security and low risk. This is very important for retirement and wealth management planning.
At Pillar Wealth Management, we rebalance your portfolio by combining active and passive management techniques. This helps us account for your financial needs, risk tolerance, and retirement goals. It also enables you to control your costs and increase your profits. Since active management is typically more expensive than passive management, utilizing both techniques can lower your tax bill as well as what you pay your wealth managers.
Interested in learning about the difference betweenactive and passive management? Then click here to read our guide on the 5 critical shifts that every high net worth investor can benefit from.
8. Preparing A More Accurate Estimate For Longevity
Many investment and wealth management firms do not account for longevity when preparing a retirement plan for their clients. According to research carried out by a Stanford biologist, the average lifespan of individuals over 65 years old is increasing by nearly 3 years for each generation. This is particularly notable for developed countries with better access to healthcare.
If all your retirement and wealth management planning is based upon the wrong estimates, then this can mean serious trouble. It can expose you to a lot of risks and deprive you of the comfort you are looking for after retirement.
Make sure you discuss this particular aspect with your wealth manager and how it affects your income goals, your asset and investment planning, and your tax implications. You can also get in touch with the experts at Pillar Wealth Management and schedule a free consultation.
Wrapping It Up
Planning for retirement is essential for every individual, but it can be a long and arduous process for high net worth and ultra-high net worth investors. The higher your net worth, the more critical it becomes to manage your assets smartly and make your wealth last.
If you need help with business transition planning andwealth management, Lubbock, get in touch with our team at Pillar Wealth Management. We offer wealth advisory services that can help you plan for retirement, ensure the security of your business and personal assets, and secure your family’s future. Click here to start a conversation with one of our wealth advisors.
- Wealth Management Reno – Selling a private business is a big decision. The higher your Company’s net worth…
- Wealth Management Baton Rouge – If you are a high net worth or an ultra-high net worth individual in Baton Rouge…
- Wealth Management Oklahoma City – When it comes to wealth management, Oklahoma City…
- Wealth Management Norfolk – For high net worth and ultra-high net worth individuals, learning to properly manage…