Financial Planning Strategies for Wealth Preservation

Achieving your desired retirement lifestyle, providing for your loved ones after your passing, and mitigating financial stress when the unexpected occurs requires wealth preservation. Regardless of income or your current spending and saving habits, long-term wealth preservation comes from a thoughtful, multi-pronged strategy. Maximizing your wealth, minimizing your tax bill, and protecting what you've earned require conversations with your advisors, who will likely recommend a mix of financial planning activities. Much of the work involves creating a solid foundation for good wealth management.

FINANCIAL PLANNING FOR WEALTH PRESERVATION: 5 CORE COMPONENTS

1. INVESTMENT PLANNING: Diversify, diversify, diversify. That's the advice you tend to hear about investment and wealth preservation, and it's generally pretty good. Spreading your investment dollars across different types of assets and industries protects you against significant losses in any one area. Even if economic trends shift and some of your investments are negatively impacted, others should retain their value. A diversified portfolio tends to weather storms better than a portfolio heavily weighted toward one company's stock or one type of security.

Investment planning also involves strategic tax planning, which in turn is necessary for maximizing wealth. Various strategies can be deployed, such as carefully timing the buying and selling of investments to minimize one's tax bill. Trusted advisors can also be tremendously valuable in helping clients assess risky or trendy investments and make informed decisions.

2. INSURANCE PLANNING: Several specific insurance types are relevant when discussing insurance and wealth preservation.

• Life insurance can be a valuable tool for wealth preservation in multiple ways. First, the payout becomes an additional source of non-taxable income for your heirs. They can use it to pay funeral expenses and estate taxes, which can be helpful for cash-strapped heirs who need to cover those expenses soon after their loved one's death and before they take control of their inherited assets. Some life insurance policies also include a cash value component that becomes an additional source of income. Your advisors can help determine if this is suitable for you. 

• Disability insurance may be appropriate in certain circumstances. Sometimes, high earners elect to buy this coverage to supplement the modest disability benefits that would be provided by Social Security if they became too disabled to work.

• Long-term care insurance,  like all forms of insurance, is an expense until you need it. In this case, you would lose your premium money if you never end up needing long-term care. However, it's estimated that 70 percent of people turning 65 now will need long-term care at some point, and 20 percent will need it for more than five years.

• Health insurance and Medicare coverage are obviously important pieces of the puzzle. Avoid coverage gaps and work with your advisors to understand all your options regarding Medicare enrollment.

3. RETIREMENT PLANNING

Retirement planning is a piece of wealth preservation because it is part of ensuring you’re making choices now to support your retirement goals down the line. If not, you may need to sell off investments and pull cash out of interest-earning accounts. Have a plan for when you will start taking Social Security benefits and which retirement accounts you will start pulling money from first. If you're married, both spouses must agree on the plan. Reviewing the status of your retirement savings and your strategy for covering future expenses should be an annual part of financial planning.

4. ESTATE PLANNING

Without estate planning, your wealth could be gone in one generation. Using trusts and other estate planning strategies lets you potentially shield some assets from estate taxes by moving them out of your control and, therefore, out of your taxable estate. Estate planning is also vital for ensuring the right assets go to the right people while establishing necessary protections to keep your heirs from mismanaging their inheritance.

5. BUSINESS PLANNING AND SUCCESSION PLANNING

Business owners have additional financial planning tasks related to wealth preservation and legacy. Will you sell the business, close it, or transfer ownership to a partner or family member? If you expect to sell, what can you do now to ensure the company is as valuable as possible? What's the plan for investing/gifting/transferring the proceeds from a potential sale? It's never too early to start thinking about succession planning and the financial realities of stepping away from your business, even if you have no immediate plans.

LET US HELP YOU CREATE STRATEGIES FOR WEALTH PRESERVATION

Sachetta's wealth management advisors are here to help when it comes to wealth preservation. We'll work together to take a 360-degree view of your current financial situation and clarify your goals, then work with you to create plans to give you peace of mind. Once you know you're doing all the right things to grow and protect your wealth, you don't have to worry about all the what-ifs. You and your money will be ready for whatever comes next.

Ready to talk about specific strategies to use financial planning for maximum wealth preservation? Contact us today!

Joseph Sachetta, CFP®, CPA/PFS, MBA, MST, For over 40 years, Joe has worked in finance and accounting. He is a Certified Financial Planner, and a Certified Public Accountant. Joe’s passion lies with helping his clients strike a balance between living for today and saving for tomorrow.