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6 Things Wealthy Boomers Must Do Before They Retire

Drazen Zigic /
Drazen Zigic /

If you’re a boomer entering retirement with a hefty nest egg, you’ve probably already tackled basic financial planning. But have you covered your bases when it comes to the more complex issues that come with substantial wealth?

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Find out how experts suggest you prepare for retirement when you’re in a different financial league. Topics range from having a sufficient cash reserve and employing tax-saving strategies, to planning for eldercare expenses and ensuring your wealth is effectively managed for the long haul.

Here are six things wealthy boomers must do before they retire. 

Make Sure To Have Enough Cash in Reserve

“First, wealthy retirees should plan to have enough cash in reserve before they retire,” said Certified Financial Planner (CFP) and founder of Next Phase Financial Planning, David Edmisten.

“Holding 12-18 months’ worth of expected spending in cash allows a new retiree to have spending money already set aside so they can enter their first year of retirement with confidence,” Edmisten continued. “Changes in the markets or economy won’t impact one’s ability to spend what they planned to spend in that first year if it is already available in cash.”

Make a Plan To Save on Taxes

Edmisten’s second piece of advice is for wealthy retirees to have a plan for saving on taxes in retirement.

He said, “Taxes can often be the highest expense one pays in retirement. Understanding how your taxable income may change when you leave your career and how future withdrawals from tax-deferred accounts like 401(k)’s could impact your tax situation is important.

“Planning ahead can help a wealthy retiree consider tax-saving strategies for how they manage their investments and how they structure retirement withdrawals. Strategies such as Roth IRA conversions, tax-loss harvesting and asset location may be worth considering to potentially lower one’s tax bill.”

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Make a Plan for Distributing Excess Wealth

It’s also important for these retirees to decide how they want to distribute any excess wealth.

Edmisten said this could include, “a number of charitable giving strategies to have a meaningful impact for causes that are important to them. Gifting appreciated assets or using a Qualified Charitable Deduction from an IRA may help benefit charities with lower tax costs.”

Arrange for Eldercare Expenses

Dillon Haviland, CFP and financial advisor at TBH Advisors said, “Eldercare and assisted living costs have been and will continue to rise, so for people who have the means to do so it makes sense to consider a long-term care policy to help mitigate the rising cost and preserve their nest egg.”

Ensure Money Is Protected

Everyone’s retirement plan should include well-diversified assets and different types of accounts, according to Skylar H. Riddle, CFP and financial advisor at Fort Pitt Capital Group.

“Some people have too much tied up in an illiquid asset like a family business or real estate,” Riddle continued. “Others may have all their money in retirement accounts, which will be taxed at a high rate. The years leading up to and immediately following retirement are the perfect years to rebalance portfolios and save in the right type of asset in the right location and titled properly.”

Riddle also suggested, “Another tactic could be to have some money in a trust. There are several types of trusts; your advisor and attorney can help you decide which ones are right for you.”

Plan for What Happens To Your Money When You Die

“Some people want the money to go to family members, others want money to go to charity and some want a bit of everything,” said Riddle. “If an estate is large enough, some of the inheritance will be taxed at 40% to the beneficiaries if not properly handled. Lifetime gifting, certain trusts, buying a second-to-die life insurance policy, and donating to a Donor Advised Fund are just a few ways to help with this dilemma.”

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This article originally appeared on 6 Things Wealthy Boomers Must Do Before They Retire