Retirement Planning for High-Net-Worth Individuals: 7 Key Strategies

According to the First Citizens Bank 2025 Wealth Survey, high-income Americans now estimate they need an average of $4.1 million to retire comfortably. However, retirement planning becomes more complex as wealth increases. In many cases, it creates new challenges that require a more strategic approach.

High-net-worth retirement strategies go beyond basic saving and investing. The goal is to create a reliable income, manage tax exposure, protect wealth, and leave a meaningful legacy. In this guide, we’ll cover the key areas to focus on.

Why High-Net-Worth Individuals Need a Different Retirement Plan

Basic retirement advice often focuses on saving money and investing in index funds. That may work while you're building wealth, but high-net-worth retirement planning becomes more complex as your assets, income sources, and tax exposure grow.

Large retirement accounts can lead to higher taxes later in life. Required minimum distributions (RMDs) can increase your taxable income and raise your Medicare costs. Income from investments, rental properties, and businesses can also affect your tax situation. Many high-net-worth individuals also want to pass wealth to their families or support charitable causes.

Since all of these areas affect one another, retirement planning may benefit from considering the full picture. A strong plan brings your investments, taxes, healthcare costs, and estate planning into alignment so they can work together to support your goals.

If you'd like help putting these pieces together, Hattig Financial can help you create a retirement plan that fits your situation.

1. Start With a Clear Retirement Vision

A successful retirement plan starts with a clear idea of what you want your retirement to look like. Understanding how to approach retirement savings involves more than increasing contributions. It involves aligning your savings strategy, future spending needs, tax planning, and long-term goals so your wealth can support the retirement lifestyle you envision.

• Define Your Retirement Lifestyle: Think about how you want to spend your time, how often you want to travel, whether you plan to keep multiple homes, and how much support you want to provide to family members.

• Estimate Future Spending: Many retirees spend more during the early years of retirement when they are more active. Creating a realistic estimate of your future expenses can help you avoid surprises later.

• Plan for Longevity and Inflation: Retirement can last 20 to 30 years or more, and inflation can increase living costs over time. Your plan may benefit from accounting for both.

• Set Legacy and Charitable Giving Goals: Decide how much wealth you want to leave to family members and how much you want to give to charitable causes. These goals can influence your tax, estate, and investment planning.

2. Build a Tax-Diversified Retirement Portfolio

Tax diversification means holding assets in accounts that are taxed differently. This gives you more control over your taxable income and withdrawals during retirement.

• Taxable Accounts: Standard brokerage accounts where investment gains may be taxed at capital gains rates. These accounts offer flexibility and are often used for index funds, ETFs, and municipal bonds.

• Tax-Deferred Accounts: Traditional 401(k)s, IRAs, and SEP-IRAs can help lower taxable income while you're working. Withdrawals are taxed as ordinary income, and these accounts are generally subject to required minimum distributions (RMDs).

• Tax-Free Accounts: Roth IRAs and Roth 401(k)s allow qualified withdrawals to be taken tax-free. They are also an option worth considering for passing wealth to heirs because qualified distributions remain tax-free.

• Why Tax Diversification Matters: Having money in all three account types can help you manage taxes, control retirement income, potentially manage Medicare surcharges, and create more flexibility when making withdrawals.

  
  

3. Create a Tax-Efficient Retirement Income Strategy

How you withdraw money in retirement may have a significant impact on how much you pay in taxes over time.

• Manage Withdrawal Order: Many retirees withdraw from taxable accounts first, tax-deferred accounts second, and Roth accounts last. However, the approach that may work well depends on your income, tax bracket, Medicare costs, and retirement goals.

• Plan for Required Minimum Distributions (RMDs): RMDs begin at age 73 and can increase your taxable income. Planning ahead can help you manage the impact on taxes and Medicare premiums.

• Consider Roth Conversions: Converting money from a traditional retirement account to a Roth account before RMDs begin may help manage future taxes and create more tax-free income later in retirement.

• Take a Long-Term Approach: Roth conversions are usually considered more useful when they are part of a multi-year tax strategy rather than a one-time decision.

• Use Qualified Charitable Distributions (QCDs): If you are age 70½ or older, you can donate directly from an IRA to a qualified charity. This can satisfy RMD requirements without increasing taxable income.

• Coordinate Social Security Benefits: The age at which you claim Social Security can affect both your retirement income and taxes. In some cases, delaying benefits may be worth evaluating for potential income and tax flexibility.

  
  

4. Design an Investment Strategy for Retirement

Retirement investing is not just about preserving wealth. Your portfolio may also support income, growth, and long-term financial goals.

• Balance Growth and Income: Retirement can last 20 to 30 years or more, so maintaining some exposure to stocks and other growth investments can help your portfolio keep up with inflation and future spending needs.

• Manage Sequence-of-Returns Risk: Poor market performance early in retirement can have a lasting impact on your portfolio, especially when you're making withdrawals. One approach some retirees consider is through a bucket strategy. Under this approach, short-term expenses are held in cash or other stable investments, while long-term assets remain invested for growth. Research by Wade Pfau, PhD, shows that the compounded return in the first 10 years of retirement accounts for roughly 77% of the final outcome, meaning a downturn in your first year can leave a lasting mark.

• Diversify Your Investments: In addition to stocks and bonds, some high-net-worth individuals invest in real estate, private equity, or private credit. Real estate, in particular, can potentially provide both income and a hedge against inflation.

  
  

5. Optimize Asset Location for Greater After-Tax Returns

Asset location is the practice of holding different investments in the accounts where they may receive the most favorable tax treatment.

• Use Taxable Accounts for Tax-Efficient Investments: Investments such as index funds, ETFs, municipal bonds, and long-term stock holdings are often considered well-suited for taxable accounts.

• Use Tax-Deferred Accounts for Tax-Inefficient Investments: Assets that generate regular taxable income, such as REITs, high-yield bonds, and some actively managed funds, may be worth placing in tax-deferred accounts depending on individual circumstances.

• Use Roth Accounts for Growth Assets: Investments with higher growth potential, such as small-cap stocks, emerging markets, or private equity, are often placed in Roth accounts because qualified withdrawals are tax-free.

• Why Asset Location Matters: Putting the right investments in the right accounts may help improve after-tax returns without increasing your investment risk.

  
  

6. Plan for Healthcare Costs and Medicare Surcharges

Healthcare can be one of the largest expenses in retirement. For high-net-worth individuals, Medicare surcharges and long-term care costs deserve special attention.

• Understand Medicare IRMAA Surcharges: Higher-income retirees may pay additional Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA). In 2026, IRMAA begins at incomes above $109,000 for single filers and $218,000 for married couples filing jointly.

• Manage Income Carefully: IRMAA is based on income from two years earlier, so retirement income decisions can affect future Medicare premiums. Strategies such as Roth conversions, Qualified Charitable Distributions (QCDs), and careful capital gains planning may help manage surcharges depending on individual circumstances..

• Plan for Long-Term Care: Long-term care can be expensive. Nursing home costs already exceed $114,000 per year on average and are expected to continue rising. Long-term care insurance and other planning tools can help prepare for these expenses.

• Protect Your Retirement Assets: An unexpected healthcare event can quickly reduce retirement savings. Planning ahead can help protect both your lifestyle and the wealth you want to leave behind.

7. Integrate Estate Planning Into Your Retirement Strategy

Estate planning may benefit from being part of your retirement plan, not a separate discussion. Decisions about taxes, withdrawals, and wealth transfers can all affect the legacy you leave behind.

• Consider Trust Strategies: Trusts can help avoid probate, protect assets, and support tax-efficient wealth transfers. For larger estates, they may also be a factor in managing future estate taxes. In 2025, the federal estate tax exemption is $13.99 million per person and $27.9 million for married couples.

• Create a Wealth Transfer Plan: Strategies such as annual gifting can help transfer wealth to family members over time while potentially managing the size of your taxable estate.

• Include Charitable Giving Goals: Tools such as Donor-Advised Funds, Charitable Remainder Trusts, and Qualified Charitable Distributions (QCDs) can help support charitable causes while potentially providing tax benefits.

• Coordinate Estate and Retirement Planning: The way you withdraw retirement assets can affect the wealth you leave to future generations. For example, Roth accounts may be worth considering for heirs because qualified withdrawals are generally tax-free.

• Review Life Insurance Needs: Life insurance can provide liquidity for heirs and help preserve assets such as family businesses or real estate that may be difficult to divide or sell.

What Are the Common Retirement Planning Mistakes High-Net-Worth Individuals Make?

Even high-income retirees can make costly planning mistakes. Some of the most common include:

• Failing to prepare for RMDs and the higher taxes they may create

• Ignoring Medicare IRMAA thresholds when making Roth conversions or realizing capital gains

• Waiting too long to begin Roth conversions

• Underestimating future healthcare and long-term care costs

• Claiming Social Security without considering the tax and income implications

• Overlooking asset location opportunities

• Treating investments, taxes, healthcare planning, and estate planning as separate decisions instead of part of one strategy

Thoughtful retirement planning for high-income earners involves coordinating all aspects of your financial life rather than focusing solely on investment returns. Many high-net-worth individuals overlook tax planning opportunities that could have a greater impact on their long-term wealth than portfolio performance alone.

How Hattig Financial Helps High-Net-Worth Individuals Build Retirement Plans

Retirement planning involves more than accumulating assets, it requires a strategy for generating income, managing taxes, and preserving wealth throughout retirement. Hattig Financial helps clients create personalized retirement plans that align investment management, retirement income planning, Social Security decisions, and legacy goals into a coordinated strategy.

For individuals and families seeking retirement planning services in Longmont, CO, the firm provides guidance on retirement income distribution, tax-efficient withdrawal strategies, and long-term financial planning. Through ongoing reviews and proactive adjustments, Hattig Financial helps clients navigate retirement with greater confidence while staying focused on their evolving goals. 

If your retirement picture involves several moving parts, one valuable starting point is often a single conversation that brings everything together. You are welcome to email us to explore whether your current retirement strategy aligns with your long-term objectives.

FAQs

What are the best high-net-worth retirement strategies?

The most effective strategies focus on tax diversification across Roth, traditional, and taxable accounts, combined with proactive Roth conversion planning before RMDs begin. Other key components include strategic withdrawal sequencing, asset location optimization, and estate planning. The right mix depends on individual income, timeline, and legacy goals.

How much do high-net-worth individuals need to retire comfortably?

Wealthy Americans estimate needing about $4.1 million to retire comfortably and up to $6.3 million to also leave a meaningful legacy. The actual number depends on lifestyle spending, healthcare costs, and longevity expectations. Planning through at least age 90 is one approach some advisors consider.

Should high-earning retirees prioritize growth or income?

Both growth and income are important, but the balance can shift over time. Early retirement typically may call for continued equity exposure due to a long time horizon, while income stability can become more important later. A bucket strategy is one way to balance short-term needs with long-term growth.

How do Roth conversions maximize after-tax retirement wealth?

Roth conversions move funds from tax-deferred accounts into Roth accounts, where growth and withdrawals are tax-free. This can potentially reduce future RMDs, help manage Medicare IRMAA exposure, and increase tax-free wealth for heirs. A commonly evaluated window is between ages 62 and 72.

How do high-net-worth retirees reduce taxes in retirement?

Tax management approaches include Roth conversions in lower-income years, considered withdrawal sequencing, and charitable giving strategies like QCDs. Managing IRMAA thresholds and coordinating Social Security timing also can help manage taxable income. Asset location strategies may further support tax efficiency.

What is the best withdrawal strategy for retirement accounts?

A common approach is to withdraw from taxable accounts first, then tax-deferred accounts, and Roth accounts last. However, the sequence that works well depends on RMDs, Social Security timing, and tax bracket management. A personalized strategy is usually necessary.

How can high-net-worth individuals leave a tax-efficient legacy and support philanthropy?

Roth IRAs can transfer tax-free to heirs, while tools like donor-advised funds and charitable remainder trusts are often used to support efficient giving. Qualified charitable distributions can also help manage taxable income while meeting RMD requirements. Advanced estate tools like GRATs and ILITs can be part of estate planning depending on individual circumstances.

How do private equity, real estate, and alternative investments fit into retirement?

Alternatives provide diversification and can potentially help manage sequence-of-returns risk due to lower correlation with public markets. Real estate may offer income and inflation protection, while private equity can add long-term growth potential. The key is to balance illiquid assets with sufficient liquidity to meet spending needs.

When should high-net-worth retirees claim Social Security?

Delaying Social Security until age 70 is a strategy some retirees consider, as benefits increase by approximately 8% per year past full retirement age. This timing may affect how Social Security income interacts with other sources of retirement income, including required minimum distributions (RMDs), which can vary depending on an individual’s overall financial situation. The decision is typically evaluated as part of a broader retirement income planning process.

What states are best for high-net-worth retirees from a tax standpoint?

States with no income tax, such as Florida, Texas, Nevada, Wyoming, and South Dakota, are often considered favorable by some retirees. However, property taxes, estate taxes, healthcare access, and cost of living also matter. The right fit depends on the full financial picture, not just income tax rates.

How should high-net-worth individuals handle a business exit before retirement?

A business exit can trigger a large taxable event, so advance planning can be valuable. Approaches may include installment sales, Opportunity Zone investments, charitable planning, and Roth conversions after the sale. The post-exit window before RMDs can be a useful period to evaluate tax planning options.

Disclosure: Hattig Financial Company is not a registered broker-dealer nor a registered investment advisor. Hattig Financial Company and Vanderbilt Financial Group are separate and unaffiliated entities. Vanderbilt Financial Group is the marketing name for Vanderbilt Securities, LLC and its affiliates. Securities offered through Vanderbilt Securities, LLC. Member FINRA, SIPC. Registered with MSRB. Clearing agent: Fidelity Clearing & Custody Solutions. Advisory Services offered through Consolidated Portfolio Review. Custodians: Fidelity Clearing & Custody Solutions, Charles Schwab. Insurance Services offered through Vanderbilt Insurance and other agencies. Supervising Office: 125 Froehlich Farm Blvd, Woodbury, NY 11797 • 631-845-5100. For additional information on services, disclosures, fees, and conflicts of interests, please visit www.vanderbiltfg.com/disclosures