6 Money Habits Wealthy Retirees Had in Common Before They Retired
Written by
Caitlyn Moorhead
Edited by
Rebekah Evans
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Have you ever wondered how wealthy retirees who can afford to travel the world in luxury accumulated their riches? As it turns out, when it comes to the financial decisions they make when retirement planning, wealthy retirees have certain money habits in common during their working years.
What you need to spend on monthly expenses is one thing, but how you save money and build wealth is another. If you want to do more than rely on iffy Social Security benefits once you reach retirement age, you may have to develop some healthier financial habits.
“These habits not only helped them build wealth but also ensured a comfortable and financially secure retirement,” said Dana Ronald, finance expert and president of Tax Crisis Institute.
Below, expert financial planners break down what these strategies are — and how you can take them into account when planning for your own retirement.
They Prioritized Savings
“Wealthy retirees made it a point to save a substantial portion of their income consistently, regardless of economic conditions,” Ronald said. “They understood the importance of living below their means, focusing on long-term financial goals over short-term pleasures.”
He said these individuals invested wisely, diversifying their portfolios to minimize risk and maximize returns.
“They didn’t chase trends but remained patient, allowing compound interest to work in their favor over time,” Ronald added.
They Prioritized Estate Planning
“Estate planning was another critical component; they sought professional advice to protect their assets and legacy,” Ronald said.
By maintaining a disciplined approach to money management, he said wealthy retirees laid the foundation for financial independence and peace of mind in their golden years. Your retirement savings account isn’t your only consideration when mapping out your nest egg.
They Maxed Out Their 401(k) Plans
“Wealthy retirees didn’t just contribute to retirement accounts, they maxed them out,” said Joyce Rojas, money expert at Money Mindset Wealth Management.
According to Rojas, most people contribute an anemic 3% of their paycheck to their 401(k) plans, whereas the wealthy challenge themselves to save before spending. This can be extremely beneficial to your retirement income in the long run.
“Remember that by the time you see your paycheck in your checking account, it’s been taxed. However, if you save into your 401(k) first, you’ll be paying yourself before you pay Uncle Sam.”
They Didn’t Subscribe To Keeping Up With the Jones’ Mentality
When the rising interest rates, costs of living, medical expenses and health insurance, you don’t have time to spend money your future self can’t afford. One of the most powerful habits that wealthy retirees share is a mindset of living below their means, Rojas explained.
“They focused on building wealth rather than spending to keep up with the Joneses,” she added. “Instead of lifestyle inflation as their income increased, they invested the difference. Their wealth wasn’t built overnight but over time by consistently investing more than they spent.”
They Automated Investing
Wealthy retirees don’t day trade, instead, they automate their investments into index funds or mutual funds.
“For example, most of my clients are on an automatic investment plan where I can pull $500 into their brokerage account as soon as their paycheck hits.”
She said this forces them to invest their money before spending it and quickly builds wealth.
They Invested in Powerful Pros
According to Rojas, people who don’t want to pay for an advisor can miss out on great advice, tax strategy and financial planning which are essential in building wealth.
“At the end of the day, you get what you pay for so if you want to build wealth and get great advice, invest in a great team of professionals: a financial advisor who has your back, a knowledgeable accountant and a savvy lawyer.”
Cindy Lamothe contributed to the reporting for this article.
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