Planning for a Peaceful, Rewarding Retirement: A Comprehensive Guide
Frequently Asked Questions
For high-net-worth retirement planning, having an expensive lifestyle necessarily requires careful investment management to be able to maintain that lifestyle during retirement.
To ensure a comfortable retirement, particularly for high-net-worth individuals, investment strategies are designed to maximize long-term growth and protection of assets.
High-net-worth individuals should max out their retirement plans, be prepared for high-cost medical expenses and long-term care, and minimize taxes by controlling withdrawals.
You can make a sizable initial investment in an annuity for long-term care, which will then cover all your care costs when needed.
While saving for retirement, the client may choose to have a higher allocation toward equities, shifting to more conservative investments when nearing retirement.
Let's consider the case of Jonathan and Kenny. When they first approached us, they were in a state of mild panic. Their liquid assets amounted to €2 million, a significant decline from the €8 million they once had. Both were retired, but they had suffered heavy losses in the 2000 financial crash and hadn't managed to recover due to a lack of new income.
At the time, they had a financial advisor, but they were fearful that their funds wouldn't last. After evaluating their situation, their financial position, and their goals, we concurred with their concerns. We recommended that at least one of them should consider returning to work.
Does this situation resonate with you? Jonathan and Kenny's circumstances closely mirrored those of Cathy and Karel, albeit with different numbers involved. We worked with Jonathan and Kenny to devise a new financial plan, complete with updated goals. Once Jonathan returned to work, we continued to revisit their goals and progress every quarter.
We're delighted to report that a few years later, Jonathan was able to retire once again. Their portfolio had been reinforced to such an extent that they were comfortably within the Comfort Zone. They now enjoy the peace of mind that comes with knowing their finances will sustain them throughout their retirement.
By regularly revisiting their goals and progress, we were able to tell Jonathan exactly when it was financially viable for him to retire again. We helped to remove emotion from the decision-making process.
This is how wealth management should function.
Your goals should inform your choices and establish your priorities. Your progress should be measured in terms of your financial alignment with these goals. And this alignment should be assessed by testing your goals against a multitude of different scenarios.
So, how does Bespoke Financial Advice facilitate this?
Here’s one of the methods: Each quarter, we have a detailed conversation with you to understand any significant changes in your life and how these might affect your financial goals. We then incorporate this updated information, along with your overall portfolio value, into our quarterly stress tests. This helps us determine whether you remain within the "Comfort Zone." This ongoing process of review and adjustment can yield a sense of simplicity, tranquility, and security.
Another Case Study: Reclaiming Retirement Goals
Karel and Cathy had long-standing careers and choose to retire early to experience life's subsequent stage. Despite the exorbitant cost of living in London, they had accrued roughly €5 million in readily available investment assets.
When the question of their financial standing, retirement aspirations, monetary plans, and the income needed to actualize these arose, Karel responded with the €5 million figure. However, Cathy's reaction to this figure was somewhat bewildering.
Delving into the details, we unearthed a harsh reality: before the dotcom bubble burst, their liquid assets amounted to an impressive €32 million. Now, they were left with a mere €5 million, a sum representing only 16% of their pre-2000 worth. A sobering reality dawned on them, casting a pall of gloom over the room and reminding Cathy of their monumental loss.
Suddenly, their retirement plans and financial discussions veered to an elementary yet critical question:
Can we make it?
Do we have sufficient resources?
Their previous advisor had irresponsibly invested the majority of their funds in risky, non-liquid investments, devoid of diversification. The advisor neglected to develop a tailored investment plan and strategy to secure their future and alleviate their anxieties. They placed their trust in him, and he utterly failed them, leading to an unnecessarily severe financial setback. Regrettably, the answer to their question was "No," which meant Karel would have to rejoin the workforce.
Understandably, they dismissed their advisor and entrusted us with their investment plan. They were convinced by our unique approach to crafting 100% personalized plans tailored to their circumstances, providing them with the financial peace they had tragically lost.
However, Cathy and Karel's predicament isn't uncommon. You face identical uncertainties and risks.
Your question mirrors theirs:
The reality is, the future is uncertain.
There's no crystal ball to predict what lies ahead.
Life will unfold unpredictably. The market will veer off the expected trajectory. Unforeseen life events and global incidents will occur, beyond your control. Such unpredictable calamities, under the right circumstances and at the wrong time, can decimate anyone's plans, even those with billions in their portfolio.
No one is invincible. No one is exempt.
Throughout the years, we have witnessed countless advisors betray their clients' trust and confidence due to their lack of experience and greed, alongside an overconfidence in their investment abilities.
Their inexperience and reliance on their firms for investment planning (as many advisors simply pool ultra-wealthy clients' funds into pre-established firm-driven portfolios) often result in devastating losses for their clients during financial crises, obliterating their clients' dreams.
The fact is that it took approximately 13 years to fully recover from the dotcom stock market crash in 2000, which led to a 60% decline, largely due to the 2008 recession. This second financial downturn, in many respects more severe, obliterated all gains made since 2001.
Consider this: no matter the size of your wealth, losses of 40%, 50%, or 60% are utterly catastrophic! Only a bespoke approach to investment planning can protect you, while still delivering the growth and long-term financial security you seek.
Sadly, a plethora of well-known financial advisors continually expose their clients to unchecked risks, much like Cathy and Karel's ordeal.
They instill in their clients a belief that they have the ability to navigate future uncertainties. However, they primarily serve their shareholders and personal financial interests, not yours, as they are not fiduciaries.
What is their strategy for your wealth?
To gamble with your money under the pretense that it is in your best interest. Of course, they won't explicitly say this. Instead, they'll spin an alluring narrative about why a particular strategy or philosophy is advantageous. However, when the next financial crisis hits—it's YOUR portfolio that suffers the consequences!
This is your life, your family, your legacy—and they are prepared to gamble it all.
And following the next market crash, they'll justify losing so much of your money with words like "unpredictable," "unforeseen," and "unprecedented." Then they'll advise you to simply "ride it out" and avoid panicking.
This is merely their excuse for their abysmal failure to protect your wealth. If you entrusted your money to an advisor who used such language during the last market crash, it's time to take your money and flee, not walk, in the opposite direction.
Why? Because nothing is unprecedented when it comes to markets. World events, market fluctuations, and life events repeat time and again. Only the names change. Whether it's Covid-19, terrorist attacks, economic downturns, or Middle Eastern conflicts—it's all the same when it comes to money.
We recognize that markets are volatile and always vulnerable to loss. The question is, what can your advisor do to safeguard your wealth when the next crisis strikes, and the one after that?
The silver lining is that Bespoke Financial Advice's unique process does actually anticipate supposedly unpredictable events, while simultaneously safeguarding the wealth you've worked so tirelessly to amass.
Karel and Cathy: A True Story of High-Net-Worth Individual
Historical evidence is laden with examples of famous personalities, who retired only to pass away within a year. We mention this not to be morbid but to emphasize a crucial point: retirement planning should commence well before you retire, not afterward.
Regrettably, it's not uncommon to hear of individuals who depart from their jobs, only to find themselves spending their days aimlessly in front of the TV, questioning their life purpose. Depression and disillusionment are surprisingly common among new retirees. A famous anonymous quote aptly said, "Retirement is a time to enjoy the things you never could before."
Now, if the thought of spending your days relaxing in front of the television sounds like your definition of paradise, that's entirely your prerogative. If your primary retirement goal is to bask in the tranquility of a recliner with an open schedule, enjoying leisure activities in the comfort of your home, planning for this sort of retirement is entirely possible. However, it's crucial to note that many people who envision this kind of simple, laid-back retirement often fail to fully seize the opportunity when it arrives.
The first and most crucial step in retirement planning involves determining how you wish to spend your time and money once you retire. Here are some thought-provoking questions to guide you in this process:
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Are there any places where you've always wanted to travel?
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Where do your relatives live, and how frequently would you like to visit them?
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Are there life experiences on your bucket list that you haven't ticked off yet?
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Is there a hobby you've always wanted to delve into but never found the time for?
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Are there any local, national, or global issues you care deeply about and would like to devote time and resources to?
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Are there any organizations, like churches, boards, or clubs, you've wanted to participate in more actively?
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Have you ever considered mentoring or coaching young individuals in your areas of expertise?
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Are there any expenses you foresee? Are there any unexpected expenses that could potentially arise?
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Do you have relatives you'll need or wish to support financially?
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What is the current status of your real estate holdings, and would you like to make any changes to them?
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Do you have any large purchases or home improvement projects in mind?
Once you start delving into these aspects, you'll realize there's a virtually endless list of activities you could engage in post-retirement. Some may require more financial commitment, while others will need less.
Remember, it's your time, your relationships, and your passions that are at stake here. Define your retirement goals based on these aspects. From there, you can continue with the finer details of your retirement planning, which could include investments and life insurance planning.
We must be really careful about this—read this story about why high-net-worth retirement planning is an important matter.
The Importance of Defining Your Retirement Goals
Understanding Retirement Planning
In essence, retirement planning is the strategic process of ensuring you’ll have a steady income stream that adequately meets your needs when you retire.
For most of us, this process involves starting to save money as early as possible after joining the workforce. It may also entail investing in an employer retirement plan or an individual pension plan.
One option at your disposal is hiring a financial advisor to manage your retirement savings, ensuring they’re working effectively for your future needs.
Table of Contents
You can have a worry-free, contented, and peaceful retirement. A worry-free retirement isn't a given, though, even for wealthy families. The majority of people agree that retirement planning is important, but how many actually know how to go through this crucial process?
This article contains advice that will guide you through the plethora of important decisions and chores required to guarantee the retirement you've always desired. Irrespective of your net worth, retirement planning is undoubtedly the most important task you will likely ever undertake for your future, especially if you are 50 years of age or older.