Pre-Retirement Strategies for High-Net-Worth Individuals

Retirement planning is a complex process, particularly for high-net-worth individuals who have accumulated significant assets over the course of their careers. Multiple considerations need to be taken into account to ensure a comfortable retirement. This often includes investment portfolio management, tax planning, and estate planning.

Meanwhile, as work increasingly becomes optional for the affluent, some are finding themselves with more free time than they know what to do with. Although their options include finding new hobbies or spending more time with family, they miss the structure and purpose their work provided. In this blog post, we’ll explore some of the best strategies to help you make the transition.

This article covers these topics (and more):

• Don’t make rash decisions that could impact your financial future
• Retirement is not a single point in time; think longer term
• The importance of a post-retirement budget and income planning
• Your well-being: the identity transition from work to retirement

Don’t Make Rash Decisions That Could Impact Your Financial Future

In the heat of the moment, it can be easy to let emotions get the best of us. Life in a fog of gloomy headlines can make it even easier. However, knee-jerk reactions can lead to rash decisions that we later regret. That’s why it’s so important to have an objective wealth management team in place.

Money is usually an emotional subject for human beings, at least to some degree. That might be because adrenaline-based reactions helped our ancestors survive highly challenging situations. The problem today is that they can lead to overreactions. 

Fear, greed, anger, and even happiness can influence how we make money decisions. Unfortunately, that’s not always in a good way. Left unchecked, runaway emotions can cloud our judgment, leading us to financial ruin. 

Here are just a few examples of how:

• Fear: One of the most common emotions that can cloud our judgment when it comes to money is fear. We may be afraid of losing what we have or we may be afraid of making a bad investment. Either way, it can cause us to make poor decisions that cost us money in the long run.

• Greed: Especially on the heels of recent financial success, the (very common) desire for more can also lead us astray. It gets tempting to make impulsive decisions in pursuit of a windfall. Some people take on more debt than they can reasonably handle—to purchase something they want but don’t need.

• Anger: Yet another emotion that can have a negative impact on our finances is anger. If we make poor investment choices out of spite or revenge, we may be doing so blindly, allowing anger to get the best of us. This is another fast lane to hasty decisions that we can later regret.

• Happiness: Even positive emotions can sometimes lead our financial decision-making off track if we’re not careful. Joy is a great thing, but we may be more likely to take risks when we’re feeling good about ourselves and our finances. This can lead to impulsive investment decisions that we wouldn’t otherwise consider.

We understand that emotions are normal to play a role in our lives. At the same time, it’s essential to keep them in check when making financial decisions. A wealth manager’s job includes helping you avoid rushing to actions that endanger your financial future.

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Retirement Is Not a Single Point in Time; Think Longer Term

Many people think of retirement as a single point in time (especially when they stop working). In reality, it’s not a single, fixed event: It’s a process that unfolds over many years. You don’t have to retire completely from work to enjoy the benefits of a retired lifestyle, either. 

Many people find that they enjoy a better quality of life by working, in some capacity, into their retirement years. Whether it’s a part-time position, consulting, or simply volunteering, staying active and engaged can help you stay sharp and prevent boredom.

There are also financial considerations to take into account when thinking about retirement. If you plan to retire completely, you’ll need to make sure you have enough money saved to cover your living expenses for the rest of your life. 

Even if you plan on continuing to work, you need to factor in long-term healthcare costs and other expenses that increase as we get older. The key is planning early, and thinking about retirement as a long-term goal. This helps ensure that you’re better prepared financially for whatever comes your way. 

The Importance of a Post-Retirement Budget and Income Planning

Ideally, your retirement should be characterized by relaxation and peace of mind. That’s what makes having a post-retirement budget and income plan necessary and important. These factors help to ensure that you can maintain your desired lifestyle while living within your means. 

Another benefit is that they help you prepare for any unexpected expenses down the road. By anticipating potential risks such as inflation or sudden healthcare costs, you can ensure that your savings aren’t depleted by the costs. 

Additionally, knowing where your funds are coming from and where they’re going can give you the confidence to make informed decisions. This, in turn, could lead to better choices regarding investments or purchases that will best serve your financial goals (while keeping within reasonable limits). 

It’s a good idea to consider finding an investment advisor to create a retirement budget with. Financial planning professionals can help you verify your likely essential expenses in retirement. 

Review Your Portfolio & Risk Tolerances As You Transition Towards Retirement

To protect your wealth, reviewing your portfolio and risk tolerances is another necessity. Find out how much market volatility you can bear and what investments fit your comfort level. It’s important to understand where you stand on these spectrums before making any major decisions.

Next, it’s time to optimize your portfolio. This often includes rebalancing asset classes or sectors, adding investments that better fit your goals and timeline, and selling off those that don’t. You’ll also want to diversify your holdings by spreading your investment across various asset types. This helps reduce the impact of any losses.

Your Well-Being: The Identity Transition From Work to Retirement

As you reach the later stages of your career and approach retirement, it is essential to understand the identity transition. It can feel like a major part of our identity and worth are based on our career and what we do for a living. However, we are all more than the sum of our work identity.

Retirement marks an opportunity to redefine ourselves through other things. As you plan your transition into retirement, research how to adapt your identity to suit new goals and interests. This can be immensely beneficial in terms of your well-being during this new phase of life.

Leverage Hobbies Into Productive Side Gigs Post Retirement

Exploring hobbies can be a great way to make the most of your retirement while keeping active and engaged. By leveraging existing skills or learning new ones, you might turn some hobbies into productive side gigs. This could be anything from writing, crafting, gardening, or tutoring online.

The benefits aren’t limited to the financial security that comes with earning additional money. Adopting a hobby-based approach to your post-retirement life can allow you to pursue projects fostering creativity. At the same time, an enjoyable side hustle can help you stay connected with your peer group while supplementing your retirement income.

ViaWealth LLC is a fiduciary financial advisory firm you can depend on through every economic season. Schedule an appointment to learn more.

ViaWealth, LLC is a Registered Investment Adviser. Information in this article is for educational purposes only and is not intended to be an offer or solicitation for the sale or purchase of any specific securities or other types of investments. Investing in the securities markets involve risk of principal and unless otherwise stated, returns are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before making any financial decisions. Past performance is not indicative of future performance.