Email FacebookTwitterMenu burgerClose thin

3 Retirement Planning Rules Rich People Swear By


If retiring rich is one of your financial goals, one of the best ways to make that happen is to study the habits of wealthy savers. When it comes to money, the rich know a thing or two about growing it and making it last, both of which are evident in the way they build their nest eggs. If you want to enjoy a lavish post-work lifestyle, here are three retirement planning rules you can put into practice.

Find out now: How much do I need to save for retirement?

1. Don’t Walk Away From Free Money

You might think that getting an employer match from a 401(k) or similar workplace retirement plan wouldn’t matter much to someone whose net worth is already in the seven-figure range. But you’d be wrong. Wealthy retirees know that when free money is on the table, that’s a savings opportunity they don’t want to miss out on.

When your employer agrees to match a percentage of your savings, you stand to save a lot more for retirement than you would otherwise. That’s a good reason to take advantage of matching contributions if your employer offers them.

2. There’s No End Point for Saving and Investing

3 Retirement Planning Rules Rich People Swear By

Wealthy investors don’t suddenly decide to stop saving or investing money once they reach their official retirement age. Maybe you shouldn’t stop investing at that point either.

While you won’t be able to continue contributing to your 401(k) or IRA when you’re no longer working, you can park your extra money in other places. For example, Treasury bills and bonds offer a safe haven for investors who want to escape the higher volatility of stocks. Real estate is another investment option for generating passive income in your retirement years.

The point is, when you hit 62, 67, 70 or whatever age you plan to retire, shifting out of savings mode isn’t a good idea. If your income in retirement is more than enough for you to maintain the kind of lifestyle you’re aiming for, there’s no reason to fritter the rest away. Putting that money into a savings or investment vehicle can help you maintain your income stream and create a lasting financial legacy for your children or other heirs.

Related Article: Why Your Retirement Age Matters

3. Protect the Wealth You’re Building

3 Retirement Planning Rules Rich People Swear By

Working your entire life to accumulate a million dollars or more in the bank is pointless if you’re not taking the proper steps to shield your wealth. Some of the tools that rich investors may use to safeguard their savings include things like living trusts, life insurance and long-term care insurance.

Each of these tools serves a different purpose and not all of them may fit into your estate plan. A trust, for example, allows you to transfer assets to the care of a trustee, who manages the assets during your lifetime and beyond. Long-term care insurance is designed to prevent you from having to spend down your assets to qualify for Medicaid if you require long-term nursing care.

As you work on growing your retirement savings, it’s a good idea to be on the lookout for potential gaps in your plan. If you’re married and you have young children, for instance, purchasing a life insurance policy can prevent your spouse from having to tap into your retirement account to cover burial expenses or other debts if something happens to you.

Find out now: How much life insurance do I need?

Final Word

Joining the ranks of the rich in retirement doesn’t have to be a pipe dream. While your net worth may not be as high as you’d like it to be, you can get it there eventually by incorporating the tactics we’ve suggested into your savings strategy.

Another way to get on track with your retirement savings is to work with a financial advisor. According to industry experts, people who work with a financial advisor are twice as likely to be on track to meet their retirement goals. A matching tool like SmartAsset’s SmartAdvisor can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

Photo credit: © Chiang, ©, ©