3 High-Net Retirement Savings Mistakes You Want to Avoid

3 High-Net Retirement Savings Mistakes You Want to Avoid

September 25, 2020

When it comes to retirement savings, the goal is quite simple for most. To accumulate as much wealth as possible so that they are able to retire in comfort and style, while they enjoy the fruits of years of labor. For those with a high-net-worth, being able to maintain their lifestyle into retirement might require a little more skill when it comes to saving. To help maintain a high-net retirement savings, below are a few mistakes that one may wish to avoid. 

Failing to Diversify Taxes

For most people, the idea of paying a lot of their hard-earned money in taxes during their retirement is far from appealing. Unfortunately, once most retirees hit the age of 70 and a half, they may notice a significant hike in their tax bill, due to required withdrawals from their retirement accounts. Once withdrawn from the account, the money is considered taxable income for the year, and it will result in the retiree being taxed at their highest tax bracket. Even though certain accounts, such as 401(k)s and IRAs allow contributions tax-free, when it comes time to remove the money, the IRS will come to collect. One approach to limiting taxes is spreading out some of the investments across Roth IRAs, Roth 401(k)s, and insurance products, which may provide retirees with a steady income that is non-taxable. 

Holding Fast to Traditional Strategies

Most investors know the typical strategies used to help amass wealth, such as Roths, IRAs, and 401(k)s. Yet, for investors who have high-net-worth, it may be advisable to include other products and strategies into the mix, which might provide you with a better chance of growing money faster than more traditional routes. By opting for differing strategies, you may enjoy greater benefits such as tax-free withdrawals. Some strategies will allow you to pay the taxes on your retirement money upfront and then benefit from tax-free money when it comes time to withdraw. 

Another benefit of trying multiple investment strategies is that it may result in more flexibility with the money. Some options will have a lot more flexibility in their terms, allowing retirees to withdraw earlier with little to no penalties. 

Not Taking Longevity Into Account

Even though trends are showing that people are living longer through the benefits of medical advancements, many people are not financially planning for an extended life. Most people will estimate the age they will live to and plan their retirement financing to that age, but ultimately if that age is exceeded, they might possibly come up short. Try planning for a decade loner than expected. For those who believe they will live to the age of 80, having enough funds to make it to 90 should be the goal. This way, if a person only lives until 80, they will still be able to live comfortably and might even be able to pass something on to their loved ones. 

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The comments above refer generally to financial markets and not Bazis Young portfolios or any related performance. The content of this article should not be considered financial advice. The article is not intended to  offer specific investment recommendations and  is general in nature and should not be considered a comprehensive review or analysis of the topics discussed. This article is not a substitute for a consultation with an investment adviser in a one-on-one context whereby all the facts of the attendee’s situation can be considered in its entirety and the investment adviser can provide individualized investment advice or a customized financial plan. Opinions expressed are current as of the date shown and are subject to change. Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss.  All investments carry some level of risk including loss of principal. Information or data shown or used in this material was received from sources believed to be reliable, but accuracy is not guaranteed. This information does not provide recipients with information or advice that is sufficient on which to base an investment decision. This information does not consider the specific investment objectives, financial situation or need of any particular investor and may not be suitable for all types of investors. Recipients should consider the content of this information as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.

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The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

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