Are you preparing for your retirement? Everyone likes to envision their golden years as peaceful, if not luxurious. However, today’s inflation and market volatility are threatening to diminish retirement stability. That’s why now is the time to start planning financially, to maximize your savings, lower your taxes, and invest as wisely as possible.
We call these rungs on the ladder to your financial future “Million-Dollar Choices™” because, over time, they can prove amazingly rewarding. In fact, through wealth financial planning, you could wind up facilitating much more than monetary security for your retirement: This is how a family’s generational wealth may begin, as well.
This article covers these topics:
- What are Million-Dollar Choices™?
- Why Is Generational Wealth Important?
- How Financial Planning Helps a Utah Small Business
- A Comfortable Retirement Has to Be Planned
- It’s Never Too Early for Estate Planning
- “By Their Fruits, You Shall Know Them.”
Million-dollar choices are financial decisions that can have life-altering impacts on your future. These choices may involve taking risks, such as accepting a job in a different market, investing money in the stock market, or trying out a new business venture.
Making calculated and informed decisions around these risks can result in positive long-term financial outcomes. However, sometimes, a million-dollar choice begins as something with seemingly little significance. For example, a decision to cut back on fast food meals might not seem like much at first, though all savings add up over time.
Many people today believe that being wealthy is a matter of luck, but this is far from the truth: Real wealth never happens by accident. It must be built through saving, investing, and strategic tax planning. Establishing saving habits and having a clear approach to how you will acquire, grow, and protect your wealth is essential.
At the same time, even with the best of intentions, building wealth as an investor involves taking risks, some of which could become losses. These, unfortunately, are sometimes necessary in order to generate greater potential returns from your assets.
I say these things as a result of 30 years of experience in the financial industry. Even today, it’s possible to look forward to a nice retirement, but you cannot do it through rolling dice and hoping. You have to be conscious about it because commitment, honesty (particularly with yourself), discipline, and persistence are essential.
It’s also important to stress that saving money alone doesn’t constitute a million-dollar choice. This is only half of the equation: True Million-Dollar Choices™ are made when you reinvest those savings so that they can grow. By turning freed-up cash into equity, you can potentially see far greater returns over the long term than you might if it only sits in a bank account.
At times, it also requires sacrifices. Learning to make peace with spending less and saving more is now an important lesson for all of us. The current economic climate has created a period of high volatility, inflation, and low returns from traditional retirement income sources.
Regardless, now is the time to start planning your financial future. Becoming mindful of your spending habits can lead to greater financial security down the road. Learning to balance between enjoying today and preparing for retirement can also free up funds for more immediate goals at times, such as travel or special occasions.
Real wealth is much more than money; it’s freedom. In other words, it goes beyond what can be quantified with dollars and cents. Genuine wealth often extends across generations, creating a family’s story over years of disciplined work, saving, and investing.
The freedom resulting from generational affluence is only possible once a family legacy has been established and secured. Recognizing this, it becomes vital to secure a family legacy now for generations to come. Thankfully, even amid today’s inflationary market volatility, lasting wealth is still obtainable.
Though these factors can provide challenges, savvy savers and entrepreneurs can still reach their financial goals (or even surpass them). Investment opportunities like real estate trust funds, for example, can be accessed to expand your portfolio.
Success there, in turn, could lead you further down the path of long-term prosperity. I can’t guarantee these things any more than I can tell you what you’ll have for breakfast two years from now. Nevertheless, when you plan your personal and business finances for it, you’ve taken the first steps in the right direction.
Financial planning for Utah’s entrepreneurs is an important factor in enhancing their success. For instance, those who’ve proactively anticipated the 2023 Social Security Cost-of-Living Adjustment (COLA) should have the least trouble budgeting for its impact on payroll taxes and in other areas.
While most family businesses focus on day-to-day operations, anticipating long-haul changes like those stemming from the COLA can help ensure your long-term stability and success. Additionally, by allocating funds and resources for investment, retirement planning, and protective insurance policies, savvy companies can potentially thrive during economically uncertain times.
Tax planning is another invaluable tool for entrepreneurs looking to maximize their profits. By taking time to assess things like your business expenses and finding ways to reduce liability, deductions can be used to decrease the amount of taxes you owe.
Knowing ahead of time about these different options for facilitating deductions can mean extra money in your pocket. It’s mainly a matter of ensuring that you’re making use of all available deductions, credits, and strategies that apply to your situation.
For example, if you have an office lease, that may be deductible. The same may go for keeping your car’s gas tank full if you commute to work in it. Understanding how these deductions work can make a marked difference in the profitability of any entrepreneur’s business.
The difference tends to be more noticeable when a small business owner has been planning proactively over a longer stretch of time. Although money can sometimes be saved off a given year’s tax cost, longer-term planning is where the truly significant savings are found.
So, if you haven’t already, start planning early to improve your potential savings. The sooner you begin, the better off you are likely to be.
Again, real wealth doesn’t typically fall from the sky. If you don’t plan for it, it doesn’t happen on its own (or last a long time, for that matter). This is why, if you want to retire in style, you’re much better off getting proactive today.
This is going to be a shock to some, but please hear me out: Enjoying every imaginable luxury today does not mean that you have a luxurious retirement locked in when you’re ready. So far, the 2020s have been an unprecedented economic roller-coaster.
Inflation and market volatility—plus impacts from COVID-era supply line shortages—have threatened to shrink even the savings of the very wealthy. I’m not pointing this out to say that you can’t retire comfortably. The point I’m making is that now more than ever, you have to plan your finances carefully if you want to pursue this goal.
For instance, diversifying your retirement portfolio can be a wise decision with regard to your long-term savings. By “diversifying,” I mean investing in a variety of types of assets, such as stocks, bonds, mutual funds, real estate, and cash investments. This may help reduce your risk (and, possibly, maximize your returns) by avoiding placing all your eggs in one basket.
Spreading your investments across different categories of assets creates a sort of firewall between them. When one kind is performing poorly, you have others that may be doing better. As a result, you may have a buffer against those losses. In fact, if another asset type is gaining, its returns could even make up for your losses.
Similarly, consider alternative assets alongside your traditional investments. These are financial vehicles offering the potential for greater returns than traditional stocks, bonds, and savings accounts. Examples include commercial real estate, venture capital, structured products, commodities (such as corn or aluminum), currencies, private equity funds, hedge funds, and more.
Unlike typical investments, these can help diversify your portfolio and give you exposure to a wider range of markets and investment products. During periods of volatility, they may help protect a portion of your wealth while helping you maintain strong growth potential, as well.
Ultimately, by diversifying your portfolio and considering alternative assets, you could help ensure that your retirement nest egg is primed for success, regardless of the current economic conditions.
It’s been said that death and taxes are life’s two most unavoidable certainties. However, for people who pass away without proper estate planning, I’d say that death, taxes, and probate are a more complete list.
When someone’s heirs are unable to locate a will, those loved ones may be forced to go through probate in order to settle the estate of the deceased. This is a time-consuming and detailed legal process that can drag out the resolution of assets and liabilities for months (or longer). It can be especially burdensome for heirs who don’t have attested documentation of what their loved ones wanted.
Whenever someone’s financial legacy drifts into probate, resources such as lawyers or trust officers may be needed to negotiate with creditors. Meanwhile, expensive additional fees can add up over time, depending on complexities in the estate itself.
These are only a few of the many reasons why it’s a good idea to get an estate plan in place, even if you’re young. Creating a will can help to get your estate settled quickly and efficiently, should the unthinkable happen. Establishing a trust can also help to ensure that things go as you intend.
Trusts are estate planning tools that allow an individual to transfer assets to a separate legal entity, known as the trustor, for the benefit of a designated beneficiary. The trustor nominates a trustee to manage the trust estate and distribute its assets according to the terms in the trust document.
These legal arrangements provide flexibility for estate planning and tax deferral purposes. Depending on the jurisdictions involved, they can also provide different levels of privacy, asset protection, and estate taxation benefits.
A trust may also help defuse possible disputes among your survivors, keeping the peace and protecting against potential financial losses. By eliminating any doubt regarding what happens with your estate assets (while specifying who carries the estate’s administration), you can reduce the amount of kindling for family flare-ups.
Just as importantly, planning your estate proactively can help you have a degree of peace amid today’s concerns. Knowing that you have things settled—and the experience of squaring it all away is behind you—can mean a lot.
What I’m going to say next may sound contradictory to all the discussions of savings and investments above, but here goes: Life is about more than money. Contrary to popular belief, money itself isn’t evil. The love of it is what Jesus condemns as evil and troublesome.
Okay, okay: I’m getting off my soapbox. Now that we’ve established that money isn’t the source of good or evil, I can say that our lives are meant (or, if you like, designed) for deeper things. For example, I’d never force anyone to try it, but I can honestly recommend charitable giving as a source of joy and peace, even when the Christmas season is months away.
Again, I’m not preaching a sermon here. The point I’m making is that philanthropy can be a great beyond-money legacy: It’s one thing to leave your descendants a pile of wealth. It’s another to also leave them with memories of helping you share some of it with worthy causes.
Private foundations, for instance, have the ability to donate to donor-advised funds (DAFs) and grant-making public charities. This can mean that your survivors have the flexibility to recommend grants of their own. These grants are eligible for a tax deduction, as with any other donation, providing your descendants with potential tax incentives (in addition to those you can get today).
Individually, you can leave gifts that keep giving, as well. For example, you might opt to donate an asset that continues generating dividends long-term. Similar arrangements have allowed people’s initial donations to last for years or even decades.
Financial success, ironically, can mean less time to manage the wealth you labor to earn. This is why I keep saying that you need a financial plan. However, I don’t say that you should tackle it by yourself. The IRS admits to deliberately targeting achievers for audits.
So, unless you want to lose time and money to mistakes on a return, get experienced financial planning from a professional. Scott Marsh Financial is a CERTIFIED FINANCIAL PLANNER™ in Utah.
We specialize in retirement planning for high-net-worth individuals, but that’s far from all the services we provide. Contact us for financial planning in Utah today.