Today’s Millionaires: Exploring What “High Net Worth” Really Means

Many individuals and families we provide wealth management services do not consider themselves rich or categorized as “high-net-worth” when they should be. So, what does it really mean to be a high-net-worth individual?

In today’s blog, we’ll examine what it means to be a high-net-worth individual and explore how far $1 million will last during your retirement years. 

As an independent, accredited investment fiduciary in New Haven, CT, we specialize in helping high-net-worth individuals create sophisticated retirement plans that set them up for the type of comfortable, secure future they have always dreamt of having.

What is a Mass-Affluent Individual?

Mass affluent individuals have liquid assets ranging from $100,000 to $1 million with an annual income of more than $75,000. This currently represents about 26% of America. These are often people with white-collar jobs who’ve been smart about saving and investing their money.

What is a High-Net-Worth Individual?

First, let’s define how net worth is calculated. Simply put, it’s what you have in the bank and other assets/investments minus any debts you may owe. Illiquid assets, such as your residence, should not be included. 

To further break this down, while there is no universally accepted definition for high-net-worth individuals, the most common definition is someone with $1 million of liquid assets – excluding homes and other illiquid assets. 

Examples of liquid assets include, but are not limited to, stocks, bonds, mutual funds, CDs, and savings accounts; investments that can be easily converted into cash. 

More tangible assets like your home, collectibles (art, cars, etc.), and jewelry are not considered liquid assets, so they typically wouldn’t be included in a net worth calculation. 

You are considered a very high net worth individual if you have $5 million to $30 million in liquid assets. Any amount over $30 million in liquid assets places you in the ultra-high net worth category. 

Watch our founder, Paul Schatz, discuss planning for a bullet-proof retirement.

Investment Management Solutions for High-Net-Worth Individuals

Now that we understand what it means to be a high-net-worth individual, it’s important to step back and assess what will be most important as you plan for retirement. 

When you’re looking for someone to help you manage your investments, you’ll find plenty of advisors eager to take on the job. But how many of those advisors are capable of truly maximizing your returns? 

While a more passive investing strategy that matches market returns may sound appealing, especially if the market is on a steady upward trend, what happens when the trend reverses? After every stretch of growth, or a “bull” market, comes a correction or downturn, otherwise known as a “bear” market. It’s as predictable as knowing winter’s on its way after fall. Many advisors preach “stay the course,” a classic buy-and-hold strategy when this happens.

But here’s the catch– if you’re nearing retirement or already there, this might be the last thing you want to hear. Following this advice could mean you are selling at the worst possible time – turning those paper losses into realized losses that are difficult to recover.

How difficult? Consider this example: You have $1 million, which declines in value to $500,000. That is a loss of 50%. Due to the reduced asset base, you have to be up 100% to get back to $1 million before calculating the impact of inflation and expenses.

So, the smarter move might be to focus on protecting what you already have rather than sticking to the buy-and-hold method. And then, when the time looks right, go after those gains with a bit more caution.

Get to Know Heritage Capital

Finding true satisfaction in retirement goes beyond just having enough in the bank; it’s about feeling secure and prepared for whatever comes in the future. That’s where solid, down-to-earth financial planning comes into play. It’s not enough to feed your details into a calculator and hope for the best. The numbers need to reflect your situation. 

We’re here—to offer tailored financial and retirement planning that fits your life.

Together, we’ll craft a plan that reflects your unique financial picture as you approach retirement. We’ll look at everything: your assets, income, what you might get from social security, taxes, and even project how your investments might grow. More importantly, we’ll put your plan through real-world tests to ensure it can withstand unexpected challenges and changes.

We’ll help answer your burning questions like:

• Do I have enough saved up to retire?
• How much can I afford to spend each month once I retire?
• What if I lived to be 100? Would I be okay?

With our hands-on approach to managing your investments, you can retire feeling prepared and confident. 

Beyond what you’ve entrusted to us, we’re also here to advise on your other retirement accounts, whether that’s a 401(k), 403(b), 457, or another type of account. We’ll help you figure out the best way to allocate your resources and keep an eye on things, suggesting tweaks whenever needed.

Our mission is to prevent the mistakes that could throw a wrench into your retirement plans. Consider us your go-to resource for all types of financial advice—whether you’re mulling over refinancing, buying a second home, or any other big financial decision. We’re here to give you unbiased advice that suits your current financial circumstances and future goals, helping you make the right decisions.

Choosing to work with Heritage Capital means you’re choosing a partner committed to your best interests. As a fiduciary, we’re legally bound to put you first. This means:

• No pushing products.
• No recommendations that benefit us more than they benefit you.
• Just honest, straightforward advice based on what’s best for you.

Make your retirement years as fulfilling and worry-free as possible with a financial plan that truly fits your life. Connect with us to learn more.