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  • Mark Fonville, CFP®

9 Components of High Net Worth Retirement Planning


9 Components of High Net Worth Retirement Planning


Do you have a high net worth between $1 million to $10 million but aren’t sure how to make the most of it?

Are you worried about outliving your retirement savings or managing your wealth to create a lifetime of sustainable income while also keeping your taxes low?

You can breathe a sigh of relief because you’re in the right place.


At Covenant Wealth Advisors, we specialize in high-net-worth retirement planning and wealth management. Our approach to personal finance seeks to help pre-retirees find their financial footing before diving into this new season.


Whether retirement is still a few years away or you’re already enjoying your golden years, it’s important to have a plan to monitor and adapt as needed.

What are the key areas of focus for high net worth retirement planning? Let’s take a look.

But first, take a minute to download our free retirement planning checklists to help you get organized.


What is the purpose of retirement planning?

First, many high-net-worth people find it beneficial to entrust their plan with a financial advisor. Your financial planner can provide the guidance, support, and strategies you need to reach your goals.


Before we look at specific elements of a retirement plan, let's first think about the purpose of your retirement plan.

The broad purpose of retirement planning is to ensure you can live the life you want without worrying about running out of money.

The end result will look different from person to person, which means that how you approach certain elements of retirement planning might not be the same as your neighbor, best friend, or co-worker. As a high-net-worth individual, your needs are unique, and building a tailored retirement plan to suit them is the best way to reach your long-term goals.

Maybe you want to travel worldwide and therefore need to spend more than someone who doesn’t have significant travel ambitions. Or perhaps you have an underlying health condition, so you’ll need more comprehensive medical coverage (and likely higher expenses).

Everyone’s financial situation is different, and your retirement plan should reflect your personal circumstances.

What should a comprehensive retirement plan look like?


Regardless of how you envision living your life in retirement, these are the critical components of a high net worth retirement plan:


1. Your spending goals


If the purpose of a plan is to support your lifestyle, you need to translate that lifestyle into spending goals.

If you already track your budget, this part will be a little easier. If you don’t, start by thinking about what you spend in a typical month.

Account for the everyday living expenses like food, utilities, housing, insurance, taxes, etc., but don’t forget to include what you might spend on “non-essentials” that are a regular part of your life like weekend trips, tickets to shows or sporting events, and gifts for family.

The idea here isn’t to start by thinking about what you can do to trim your budget. That part can come next if it’s necessary.


2. Cash flow projections with appropriate inflation adjustments


Once you establish a benchmark for your annual funding needs, you need to project that into the future using reasonable assumptions for inflation.

Historically, inflation has averaged around 2.5% per year, but as you know, the scales are a bit off balance presently. You can use that as a starting point and may want to adjust depending on the main categories you spend on.


3. Tax reduction strategies in retirement


So here’s the thing: we really like tax planning at Covenant Wealth Advisors because so many of our clients are high-net-worth. Proactive tax planning is critical for high-net-worth individuals and families in retirement because it helps keep more of your hard-earned money working for you.

Many families aren’t quite sure how to manage their new tax situation in retirement, but we offer unique strategies that can help bring confidence and control back into this vital area of your financial life.

With proper tax management, you can stretch your retirement savings even further by actively considering ways to reduce taxes in retirement. The following few points will illustrate a few of these tax-savers!


4. Account drawdown strategy


A withdrawal strategy goes beyond considering how much you will withdraw from your retirement accounts. Conventional wisdom has pointed people toward taking