Three Mistakes High-Net-Worth People Make in Retirement
Even if you have a sizeable net worth, you can still make blunders in retirement. However, these blunders may not be the same now that you have more disposable income.
Here are three common blunders high-net-worth individuals make in retirement:
1. Failing to amend estate documents with current net worth and concerns.
As your net worth increases, your estate plan and documentation should be updated to reflect that. The 2017 Tax Cuts and Jobs Act's sunset provisions are approaching, which serves as a reminder to assess your estate plans regularly.
If you have an estate worth more than $25 million, you should consult with your advisor and attorney about what measures to take before the estate tax is reduced in half.
And, as your estate expands, you may have additional concerns or loftier aspirations for your estate plan. If you don't update your estate paperwork to reflect your current net worth and ambitions, you may be missing out on some tax-saving opportunities.
2. Underestimating health care expenditures.
With the current increase in inflation, it isn't easy to estimate how much products will cost in the future. If you are in your 60s, you may not be thinking about how much health care will cost when you are 80, but this matter should be addressed. If you want to buy an independent living space with progressive assistance alternatives, the cost in 20 years will be nothing like it is now.
Perhaps you are counting on long-term care (LTC) insurance to help cover future expenses. People are increasingly dependent on the idea of self-insuring as long-term care insurance becomes more expensive and more complex to get. But how much do you really need?
It is critical to establish what you want your retirement to look like, to begin your study early, and to grasp the costs. Then, add an inflation adjustment rider to those expenses to get a decent estimate of what they might be.
If you underestimate such costs, your future may not look as expected. The funds you intend to leave for your family may not be available. Your substantial estate may be subject to claims from healthcare providers requesting payment. It is critical to recognize these expenses and plan accordingly.
3. Not adjusting asset allocation to match your requirements and objectives.
As your estate grows, it is critical to recognize your objectives and how they may have evolved. Are you investing in yourself and your needs? Do you invest with future generations in mind? Is your goal to increase your net worth or merely protect what you have?
Furthermore, when your net worth grows, additional investment opportunities become available to you. You have access to alternative assets and funds that are often reserved for high-net-worth individuals.
It is critical to locate a trustworthy adviser to help you navigate these types of questions and aid you in building a portfolio that suits your requirements and goals while continuing to work with you as your goals change over time.
