If you are already retired, and you are not a millionaire, then it may be a bit late. However, if you have some time on your side before retirement, here are a few things you can do to create a millionaire retirement.
Millionaire Retirement – Rankings
The 2017 Global Retirement Index lists the United States 17th in its recent global listing. I am actually not discouraged by this listing. We are near the top of the list in finances, quality of life and health, but not “material wellbeing”. The later category consists of income equality, income per capita and unemployment. I am not a fan of government sponsored income equality. Some forms of government report high employment because everyone is employed by the government. I also do not favor such forms of government. Can we do a better job? Sure, but let us do so wisely, not by changing primary American values because of such rankings.
Millionaire Retirement – Demographics
With the decline of the company pension, individuals take on more responsibility for retirement savings and planning. That’s a significant burden, since no one knows exactly how much money they’ll need or how long they’ll live (they could underestimate by decades), people don’t have the confidence or skill to make such consequential financial decisions, and many don’t trust financial markets.
Americans view forced savings positively — 80% of survey respondents thought it should be mandatory for employers to offer a plan, and 61% said that individual contributions should be mandatory as well.
About 70% of baby boomers (age 51 to 71) believe government benefits will be available to them when they retire. But aside from government funds, investors said their retirement would be financed by personal savings (90%), personal investments (79%), and workplace savings (76%) before Social Security (70%). They also plan to rely on their spouse’s or partner’s savings (63%) and liquidation of personal assets such as a home or business (51%).
Some people are hoping for help from outside sources, such as an inheritance (45%) or even hitting up their kids for money or a place to live (41%). This means that the generation criticized for living too long with their parents as young adults may wind up retiring to their children’s garages. Though unlike boomers, millennials still have decades to save aggressively and avoid that fate.
Millionaire Retirement – Your Plan
Would you rather have $1 Million of tax deferred, qualified funds or $700,000 of tax free funds? Distributions taxed as ordinary income, required minimum distributions or face high penalties, restricted investments and the potential of prohibited transactions, versus doing what you want with your money when you want. My point here is that the character of your funds may be more important than the actual amount.
Part of your plan should address the character of your funds. Taxable, tax deferred or tax free? Many people find that, after saving most of their funds tax deferred, the tax bill is obnoxiously onerous.
Another part of your plan includes spending. Many people have more than enough income and assets to retire as millionaires, but their spending is such that they are forced to live frugally in retirement.
Is your retirement plan to win a lottery or a jackpot, rely on personal savings, pick the right stock, trust the government to take care of you, retire on a cruise ship, or maybe just don’t live that long? Better to have a plan and not fully hit your goals than to have no plan at all.
I am happy to discuss how to create a higher level of tax free assets and income, or create unique investments within your qualified funds for better tax deferred growth. Contact me here.