High Net Worth Retirement Planning Strategies in Woodbridge, CT

As a high-net-worth individual, you may face unique challenges when planning for retirement. Balancing the desire for a comfortable current lifestyle, the ambition to retire by a certain age, and the goal of creating generational wealth and leaving a legacy can be daunting. As your wealth grows, the complexity of planning and managing it can also increase for several reasons:

  1. Investment Diversification: A larger wealth portfolio might require a more diversified investment approach. You may need to invest in various asset classes, including stocks, bonds, mutual funds, and alternative investments, such as real estate. Diversifying your portfolio requires understanding a variety of markets and making informed decisions about risk exposure.
  2. Taxation: Larger wealth often brings more tax liabilities. How you invest and where you keep your wealth can have significant tax implications, and managing these properly can significantly impact your net returns.
  3. Estate Planning: As your wealth increases, so does the importance of planning for the disposition of your assets after you and your spouse are both gone. This may involve setting up trusts, creating a will, buying survivor life insurance, and more.
  4. Philanthropy: You can make a difference in your community and the causes you believe in with greater wealth. Structuring your philanthropic causes in a way that is effective for the causes you choose to support and beneficial for your tax situation can be complex.
  5. International Considerations: If your wealth is substantial, you may have assets or interests in multiple countries. This brings additional complexity when your assets are subject to the regulations of multiple jurisdictions, each with its laws, tax codes, and regulations.
  6. Risk Management: The more wealth you have, the more you have to protect yourself from unexpected liabilities. This can be life, disability, long-term care, and other risks.  

Tip: Rather than going it alone, consider utilizing the services of a Woodbridge, CT, fee-only fiduciary financial advisor to help you create a conservative retirement plan that addresses the issues noted above, plus the economy and volatility in the securities markets. 


If you are nearing retirement, check out our eBook: “How To Plan A Bulletproof Retirement In Turbulent Times.” 


Chapter 1

The Benefits of Working with a Fee-Only Financial Advisor in Woodbridge, CT

fee only financial advisor

As the name suggests, a fee-only financial advisor operates fee-for-service. This means the advisor charges clients for his or her services, typically as a percentage of assets under management, a flat fee, or an hourly fee. Unlike commission-based advisors, fee-only advisors are not paid commissions by third parties for selling their investment products. This means the advisor works for the client, not a third-party product company.

Working with a fee-only financial advisor in Woodbridge, CT, offers several important advantages: 

  1. Expertise: A professional advisor has the knowledge and experience to navigate the complexities of managing significant client assets. The financial advisor can guide you on retirement planning, investment decisions, tax planning, estate planning, and more.
  2. Time: Managing wealth can be time-consuming, particularly as your wealth grows. An advisor can take on this burden, enabling you to focus on other career, business, and family obligations. 
  3. Fiduciary Responsibility: Fee-only advisors are financial fiduciaries, which means they are ethically bound to act in your best interest. It is different for advisors who earn commissions on selling investment products. They are obligated to make suitable recommendations, but they are optional to put your financial interests ahead of their own.
  4. Objectivity: Because fee-only advisors are paid a flat fee, they are frequently seen as more objective. They do not have a financial incentive to sell certain products or investments, which can help ensure their advice is based on what is best for you.

Tip:  When you approach or are already retired, you often have limited room for error. It is too late to start over. Who wants to seek employment out of necessity after they have already retired? This makes it crucial to get things right from the very beginning. Selecting the right investment advisor to help oversee your wealth may be one of your life’s most important financial decisions.

The market is flooded with financial advisors ready to assist you. However, not all of them exhibit the level of dedication to your financial future that you deserve. At Heritage Capital, we’ve dedicated over thirty years to aiding individuals to navigate the complexities of pre-retirement and retirement investing.

Chapter 2

Comparison Between Fee-Only and Commission-Based Financial Advisors

fiduciary financial advisor

Fee-only and commission-based financial advisors offer two distinctly different compensation models, affecting their advice and their client’s overall financial experience. 

Financial advisors who follow a fee-only model derive their income directly from clients’, which could be structured as a fixed fee, an hourly rate, or a portion of the assets they manage. This arrangement creates a common interest. Why? A fee-only structure creates a shared incentive between you and your advisor. The advisor’s compensation increases when the value of the investor’s assets increases. It is also true going the opposite direction.   

This arrangement motivates the advisor to grow and protect your wealth rather than merely generating transactions or selling products for various commission types.

Tip: A fee-only financial advisor is less likely to recommend investments based on potential commissions and more likely to recommend what is truly in the client’s best interest. This level of transparency and impartiality can foster a sense of trust, which is crucial in a long-term advisor-client relationship, especially for those investors with substantial assets.

Chapter 3

What is the AIF® Designation?

financial advisor fiduciary dutyAn AIF®, or Accredited Investment Fiduciary, is a professional designation awarded by the Center for Fiduciary Studies, a branch of the non-profit organization Fi360. This designation is earned by exhibiting knowledge and competency regarding fiduciary regulations that are based on the management of other peoples’ money.  

To earn the AIF® designation, candidates must complete a training program, pass an examination, agree to a code of ethics, and commit to ongoing continuing education. The industry recognizes the AIF® designation as a standard for competency and ethics in fiduciary duties and responsibilities.

Tip: High-net-worth individuals can benefit significantly from hiring a fee-only financial advisor with the AIF® designation. The fiduciary responsibility assumed by an AIF® means they are legally obliged to always act in the client’s best interest and avoid conflicts of interest that can occur with commission-based advisors. 

The fee-only structure also promotes transparency because it does away with hidden costs and unexpected charges that negatively impact the performance of an investor’s assets. The AIF® designation is a visible symbol that the advisor adheres to the highest ethical standard in the financial service industry.   

Chapter 4

Generational Wealth and Outliving Your Money

generational financial planning

Generational wealth refers to wealth passed down from generation to generation. High-net-worth individuals often aim to build generational wealth to provide financial security for future generations of their families.

Managing generational wealth can be complex, involving tax planning, estate planning, investing, and risk management. One of the most significant challenges is developing an investment strategy that produces a rate of return that outpaces the impact of distributions, inflation, taxes, and investment-related expenses during retirement years.

For high-net-worth individuals, the risk of outliving their money may seem remote, yet it can be a legitimate concern late in life. Longevity, increasing healthcare costs, and unanticipated market downturns can deplete even substantial amounts of assets set aside for retirement.  

Tip: Crafting a comprehensive retirement plan that factors in these rising costs and expenses is crucial for pursuing long-term financial independence.  Regularly reviewing your retirement plan with your financial advisor is also important to ensure your retirement plan is on track. A fee-only fiduciary financial advisor in Woodbridge, CT, can be a valuable ally in securing your generational wealth. 

Chapter 5

When is the Right Time to Start Taking Social Security Benefits?

social security benefits

Social security may be a small percentage of your retirement income, but it is there, so it should be part of your retirement income plan. At a minimum, it reduces the need to spend on other retirement assets. 

While deciding when to start taking Social Security benefits is personal and depends on various factors, high-net-worth individuals and high-income earners often benefit from delaying the start of their benefits. Here are some reasons for delaying your benefits:

  1. Maximizing Benefits: The most important reason for delaying Social Security is to maximize the total lifetime benefits received. Social Security benefits increase by approximately 8% each year, and the start of benefits can be delayed up to age 70. Waiting until then to start benefits can result in substantially higher monthly payments than starting at 62. This permanent increase can significantly boost income when other sources of income begin to decline in value.
  2. Life Expectancy: If you expect to live a long life based on your health, lifestyle, and family history, delaying Social Security makes sense because the higher benefits received later outweigh the benefits you would receive earlier. Waiting might be optimal if you’re healthy, have good genes, and anticipate a long retirement (30 years or more).
  3. Tax Considerations: High-income earners might still work in their 60s and even into their 70s. If they start taking Social Security while still earning a high income, their benefits might be subject to reductions, impacting the amount they receive. High earners who take benefits early might also push themselves into a higher tax bracket, leading to more of their Social Security benefits being taxed away.
  4. Legacy Planning: High-net-worth individuals may have less need for Social Security income during their early retirement years and might want to maximize the survivor benefits that their spouse or dependents could receive. If the higher-earning spouse can delay benefits until age 70, the surviving spouse will receive the maximum possible benefit.

Tip: A fiduciary financial advisor specializing in retirement planning can guide you on when to take social security and how to structure your withdrawals to minimize taxes. The advisors can also help you understand the intricacies of Connecticut’s tax laws, enabling you to plan more effectively.

Chapter 6

Defensive Investment Management Strategies for Retirees

defensive investment strategies

As you age and approach your anticipated retirement date, adopting a more defensive investment strategy for all your assets becomes increasingly important. There are several reasons for this reduction in risk exposure:

  1. Reduced Earning Years: One of the most significant reasons is that you will have fewer years left to earn income that can offset any investment losses you may incur. If this happens to you, delaying your retirement date or working part-time to rebuild some savings accounts is prudent.
  2. Decreased Risk Tolerance: Your risk tolerance will likely decrease as you age. This is not just due to the psychological aspect of not wanting to lose money but also the practicality that you have less time to recover from potential financial losses.
  3. Need for Income: As you near retirement, the purpose of your investment strategy begins to shift from accumulation to protection and the production of income. Your goal should be to protect your principal amount and spend income (dividends, interest) to cover your cost of living. Spending principal during early retirement years can have a spiral effect.  More defensive investments like bonds and dividend-paying stocks are better at providing this kind of consistent income.
  4. Potential Market Volatility: Markets are inherently unpredictable and can be subject to significant volatility. As you approach retirement, you want to protect your investments against these downturns as much as possible. A more defensive strategy can help shield your portfolio from sudden market drops.
  5. Asset Preservation: As you and your spouse age, preserving wealth becomes more important than principal growth. Anything left over becomes a legacy for your heirs and the charitable causes you believe in.

Tip: Defensive investing doesn’t mean avoiding the stock market altogether. It’s more about finding a balance that aligns with your risk tolerance, time horizon, and financial goals. This could mean diversifying your portfolio by investing in different strategies, which may include blue-chip or higher dividend-paying stocks, short, intermediate, and longer-term bonds, and maintaining a healthy cash reserve. It’s also important to regularly review and adjust your investment strategy as you move through early, mid, and late retirement years. Consider connecting with our team to learn more about defensive retirement strategies.