If you’re thinking of retiring sooner rather than later, you are not alone. In 2020, more people retired than in any one year in the previous decade, per the Pew Research Center. A raging pandemic has increased focus on priorities and the urge to not put things off. Just as important: we have had a decade of rising asset prices – from stocks to real estate – so household wealth for some is at levels that can sustain not only retirement but also create a legacy over many generations.
Still, as I well know from working with clients for more than 30 years, actually retiring – saying goodbye to a job or business that has sustained you for decades – takes conviction. And that’s especially hard now given the great deal of uncertainty we continue to face as we head into 2021. To provide our clients with the confidence they need to retire with less angst, we help them answer these three key questions:
#1. Am I ready to retire? If you’re a high-net-worth individual, chances are this is not about whether you have enough to retire but how to re-align your wealth with your life and your legacy. This usually requires a shift away from accumulating wealth to accessing it and redeploying it. While this shift can be immensely gratifying and liberating, it is also quite scary to contemplate at first. This is a major psychological and financial transition, especially for people whose net worth is tied up in a business, investment real estate or other less-liquid assets.
To answer this question, we strategize with you about what optimal diversification, income generation, and tax-efficiency would look like. Perhaps you sell some assets, transfer ownership of others, or even re-develop for higher cash flow. Should you own assets outright, or perhaps shift them to an LLC or a trust? Each situation is unique, but to each we apply a team of experts in investments and real estate, trust and estate planning, and business strategies.
If selling, how do you do that in the most tax-efficient way? And, if desired, how can your children and other family members benefit? What does reinvestment look like in a market that is at record-high levels and interest rates are near record lows? By helping you answer these questions and many more, retirement angst is replaced by renewed energy.
#2. Is there a built-in buffer? There are many unknowns in retirement, including the great unknowns of health and longevity, as well as investment returns, tax policy and regulations. Using a wide variety of tools and strategies, we focus on managing or minimizing risk across your entire asset base – from your investment portfolio to residential real estate and collectibles.
We assess where you have gaps in insurance coverage, analyze options for self-insurance, and come up with alternatives in case things don’t go as expected. The spending plans we generate up to age 100 have levels of confidence based on a variety of scenarios for asset growth and personal spending levels. We monitor these closely and alert you to potential shortfalls.
#3. Is there built-in flexibility? As my colleague Rodney Van Belle points out in this excellent article, Retired and Resilient, retirement is a major phase of life that can last for 30 years or more. For most people, it is definitely not static. You may want to ease into retirement by working part-time, for instance, or retire and then five years later decide you want to start a new business or live abroad.
For each new challenge or opportunity you face, we show you what it would mean for your finances and asset base. You can then see the trade-offs before deciding. Our analysis includes everything from government programs (Medicare and Social Security), to lifestyle considerations and your estate plan. We strive for no loose ends and no regrets.
Retire with Confidence
Retirement planning is not just a financial consideration. It really is about you, your life, and your legacy. And that’s why I love retirement planning at LNWM. We bring together investment analysts, wealth planners, trust, tax, and estate experts to come up with a plan for you that works well on many different levels, is scalable and can change if your priorities change. Knowing all this is what allows our clients to ease into retirement and truly enjoy it.
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Retired and Resilient - Strategies for the 2020s