But first, let’s ask Chris what he would do if he had a $1 million and wasn’t a CFP® Professional.
We want to set the stage for this discussion on what millionaires do in times of economic uncertainty by looking at some statistics from
. According to the study, Americans think that they need to amass $1.27 million to retire without financial stress. That number jumps all the way up to $1.56 million for people in their 50s. Northwestern Mutual’s 2023 Planning & Progress Study
FIGURE 1 – How Much Americans Think They Need for Retirement vs. How Much They’ve Saved – Northwestern Mutual
In their same study from 2022, the average expected amount needed for retirement was $1.25 million. Given the
we’ve been in, the increase from $1.25 million to $1.27 million is hardly a surprise. high inflationary, high interest rate environment Creating a Spending Plan for Retirement
But just because that study says that Americans feels they need $1.27 million to comfortably retire doesn’t mean that’s
. how much YOU need to retire
“There are some people that only need $50,000 net a year in retirement and there are some people that can’t retire on that. The amount that you need to save is going to be dependent on what you want to do.” – Logan DeGraeve, CFP®
How much you need to retire depends on your unique
. And what are your current vs. expected expenses? What do we need to account for throughout the life of your retirement? A lot of people don’t like the word “budget.” It doesn’t need to be something you live within, but it’s critical for people of all ages to outline their planned expenses. We like to refer to it as retirement goals and lifestyle . creating a spending plan
It’s also important to
. What if you plan for unexpected expenses , or have need a new car, have urgent home repairs ? Those things also need to be considered as you’re creating a spending plan. That leads us right into three things that millionaires likely do in times of economic uncertainty. significant health care expenses 1. What Millionaires Do in Times of Economic Uncertainty: Plan for Market Volatility
Northwestern Mutual’s research found that only 52% of Americans have a
that forward-looking financial plan for the possibility of a market downturn, heightened inflation, etc. That percentage goes up to 84% when segmenting it to the wealthiest Americans. stress tests
“Wealthy people hold themselves to an exceptionally high standard when it comes to managing their finances,” Aditi Javeri Gokhale, Northwestern Mutual Chief Strategy Officer and Head of Institutional Investments
Almost exactly two years ago,
and Dean Barber had a thorough conversation on Bud Kasper about America’s Wealth Management Show . Let’s revisit seven yes-or-no questions that Dean asked about how to plan for uncertainty in retirement that you can and can’t control to illustrate that economic uncertainty is something that you can plan for. retirement risks
“Can you control inflation?
Can you control what tax rates are going to do?
Can you control how much you’re going to pay in taxes?
Can you control how you’ve predicted inflation into your future?
Can you control the markets?
Can you control interest rates?
No. Here’s the biggest question. Can you control how those things will be handled so that you can give yourself the highest probability of the proper outcome in the future ? The answer is absolutely, unequivocally, yes.” – Dean Barber
You don’t need to reinvent the wheel during the financial planning process. Look at what the wealthy are doing and copy what they’re doing. That starts with having a plan. It’s not a coincidence that the wealthy are wealthy because they plan for it.
2. What Millionaires Do in Times of Economic Uncertainty: Work with a Team of Financial Professionals
Notice that the second and third questions that Dean asked there were tied directly to taxes.
and Taxes are typically the two biggest wealth-eroding factors in retirement. Do you think that one financial advisor can effectively plan for your all your financial planning needs— health care , cash flow management , tax planning , risk management , etc.? That’s a lot to ask of one person. estate planning
Well, the ultra-wealthy expect their financial advisor to work with their CPA, CFA, attorney, and insurance specialists. Think about all the constant communication that needs to happen between those professionals to get the best results for the client. There’s a lot that can get lost in translation.
. Our team of professionals firmly believes that the millionaire next door should get the same financial planning experience that the ultra-wealthy have come to expect. That’s why we’ve built a full-service wealth management firm at Modern Wealth
“There are multiple facets with financial planning, especially when you get into retirement because there are a lot of moving pieces. Your team needs to work together and understand what the end goal is.” – Chris Rett, CFP® 3. What Millionaires Do in Times of Economic Uncertainty: Continuously Monitor Their Financial Plan and Update It as Necessary
Things can instantly change in times of economic uncertainty. So, building your plan with a team of financial professionals isn’t enough. You need to review your plan with them at least once or twice a year because of how much can change. There can be changes in the markets, tax code, your retirement goals—the list goes on.
Think of it as a financial checkup. It’s not any different than going to the doctor for a checkup. Instead of a checkup on your health, you’re doing a checkup on the various components of your financial life.
“Just because you clean out your car one time doesn’t mean that you never need to clean it out again. It’s important to monitor your financial plan. Are you on track?” – Chris Rett, CFP® Going Through the Retirement Planning Process with Your Spouse
It might sound obvious, but it’s important to
. Your spouse’s wants, needs, and wishes need to be incorporated into your plan too. go through the retirement planning process with your spouse as well ? Whether you’re starting the retirement planning process or are trying to fine tune your financial plan, take some time to review our What are their goals for retirement Retirement Plan Checklist with your spouse. It consists of 30 yes-or-no questions and an age-based timeline that cover a . Download your copy below! variety of key retirement considerations
Retirement Plan Checklist It All Starts with a Financial Plan
Of course, if you don’t have a financial plan, that’s where it all starts. That was the baseline for all three things on our list of what millionaires do in times of economic uncertainty. If you don’t have a plan and/or have concerns about if your plan can get you to and through retirement, we want to share more with you about our team approach to financial planning.
“It always starts with the plan. ” – Chris Rett, CFP® Like Ben Franklin said, ‘failing to plan is planning to fail.’
We welcome you and your spouse to schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals by
. Again, the process begins with defining your retirement goals and lifestyle. We want to get a better understanding of who you are and what you need your money to do for you instead of jumping right in and asking about your investments. clicking here
You can meet with us in person, virtually, or by phone—it’s whatever is easiest for you. We hope that what we’ve shared about what millionaires do in times of economic uncertainty has helped you to understand that it’s critical for everyone to have a forward-looking financial plan.
What Millionaires Do in Times of Economic Uncertainty |
– Introductions 00:00 – What Would Chris Do with $1 Million?
01:00 – How Much Do You Need to Retire?
01:45 – What Are Millionaires Doing?
06:31 – 1) Failing to Plan is Planning to Fail
07:17 – 2) Build a Financial Planning Team
11:48 – 3) Continuously Monitoring & Adjusting the Plan
17:07 – What We Learned Today
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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser. The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.