5 Key Financial Habits of Upper-Class Retirees
Written by
Lydia Kibet
Edited by
Rebekah Evans
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Retirement doesn’t look the same for everyone. While average retirees worry about outliving their savings, upper-class retirees are playing an entirely different game. Their habits go beyond basic budgeting. They think about taxes, long-term care and even how their wealth will impact the next generation.
The surprising thing is that most of these habits aren’t exclusive to the wealthy. Anyone can learn from them to improve their own retirement planning. Here are five financial habits of upper-class retirees, according to experts.
Tax Planning
How the wealthy approach their taxes is different. Instead of waiting for tax bills to arrive, they plan years in advance. This could mean making moves like Roth IRA conversions that can lower their taxes in retirement.
“Upper-class retirees look for opportunities to manage their lifetime tax bill by looking at strategies like converting IRA to Roth IRA in the years between retirement and the beginning of required minimum distributions from IRAs,” said Patti Black, financial advisor at Savant Wealth. “During these years, retirees often have lower income, making it advantageous to pay a little more in taxes (due to Roth conversions) to enhance tax-free growth and withdrawals later.”
Long-Term Care Plan
Upper-class retirees also prepare for long-term care, one of retirement’s biggest unknowns. While some may buy long-term care insurance, others create detailed care plans outlining their preferences for where and how they want to receive care.
“They spend time thinking about and writing down what type of care they want and where they want to receive that care, whether at home or in a community,” Black said. “For example, by front-loading travel earlier in retirement when health and mobility may be better.”
Wealth Preservation
The upper-class think differently when it comes to wealth. They don’t just accumulate wealth but also focus on preserving it for the next generation. “For the upper-class retirees, their financial concerns go beyond ensuring their own financial stability throughout their retirement years but also extend to the desire to leave a well-performing inheritance to their heirs,” said Aaron Razon, personal finance expert at Couponsnake.
This legacy mindset shapes how they invest and spend, keeping future generations in mind. “This is why they invest not only in assets with greater likelihood of appreciation, like stocks, real estate and private equity, but they also pay for the services of financial advisors and estate planners to minimize taxes and ensure that their wealth is effectively transferred to their heirs,” Razon added.
Diversify Portfolios
Diversification is another habit of upper-class retirees. This helps reduce risk, leverage growth opportunities and ensure their wealth can weather different market cycles.
“No other class of retirees does portfolio diversification as well as the upper class and the truth is that this is not solely because they have more financial resources to diversify but mostly because they have access to more investment opportunities. Plus, they already know firsthand the benefits of a diversified portfolio,” Razon explained.
Professional Guidance
Upper-class retirees know they don’t have to manage everything on their own. Many work with financial planners, estate attorneys and investment managers to ensure their wealth is handled with expertise.
“To understand how much you can spend in retirement, you need a tailored financial plan for your needs. It should be sustainable based on your assets and include assumptions for inflation, investment growth and plans for unexpected expenses like long-term care,” said Rachel Gustafson, investment advisor at Financial Investment Team.
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