Leaving a job after years of hard work is an emotional time. That’s why having something to look forward to like a luxurious retirement can help ease the transition.
There’s nothing like sipping cocktails in Hawaii while you wave goodbye to your working years to help you move on. And a good financial plan can help you achieve just that.
GOBankingRates spoke with Dennis Shirshikov, financial planner and head of growth for GoSummer , as well as John F. Pace, CPA and tax partner at Pace & Associates CPAs , to discuss the steps you should take to build wealth for a luxurious retirement.
According to Shirshikov, a luxurious retirement goes beyond financial security and comfort, encompassing a lifestyle filled with high-end experiences, travel, leisure activities and the freedom to pursue passions without financial constraints.
“This might include owning multiple properties in desirable locations, indulging in gourmet dining, traveling in first-class or private jets, and participating in exclusive social and cultural events.”
To achieve a luxurious retirement, it’s crucial to go beyond conventional saving methods and invest strategically.
“Diversifying your investment portfolio with a mix of stocks, bonds, real estate and alternative investments like private equity or hedge funds can significantly enhance wealth accumulation,” Shirshikov said.
For instance, investing in high-growth stocks and real estate properties that appreciate over time can provide substantial returns.
Additionally, he said utilizing tax-advantaged accounts like Roth IRAs and 401(k) plans can maximize growth while minimizing tax liabilities.
Starting a business or investing in income-generating ventures can be a powerful way to build wealth.
Entrepreneurship offers the potential for exponential growth, while passive income streams, such as rental income, dividends or royalties, provide steady cash flow without constant active management.
“Developing multiple income streams can ensure financial security and growth, even during market fluctuations,” Shirshikov said.
Maximize Earnings and Career Advancement
Strategically advancing your career and maximizing your earnings during your working years is fundamental, Shirshikov said.
Pursuing higher education, specialized certifications and networking can lead to higher-paying positions and more significant bonuses.
He added that negotiating salaries and benefits can compound over the years, significantly boosting retirement savings.
Estate Planning and Tax Optimization
Effective estate planning and tax strategies are essential to preserving and growing wealth.
“Utilizing trusts, gifting strategies and charitable donations can reduce taxable estate size, ensuring more wealth is passed on to heirs or philanthropic causes,” Shirshikov said.
Working with a tax advisor to optimize tax liabilities during both the accumulation and distribution phases of retirement can also save substantial amounts.
Additional Advice From a Tax Expert
“As a CPA with over 40 years of experience, I have helped many clients build wealth for a luxurious retirement,” Pace said.
The key, he explained, is maximizing tax-advantaged accounts like 401(k) plans, IRAs and HSAs, which provide tax benefits and allow your money to grow tax-deferred or tax-free.
“For example, I helped a client maximize contributions to her 401(k) and Roth IRA for 25 years. By retirement, she had over $3 million in those accounts which now provide tax-free income.”
He noted that a luxurious retirement also means having additional sources of taxable income.
“I encouraged clients to invest in the stock market through brokerage accounts and real estate. One client purchased a multifamily property that now generates over $100,000 in annual income. Between his tax-advantaged accounts and real estate income, he enjoys an annual income well into the six figures in retirement.”
Finally, Pace said a luxurious retirement requires proper financial planning to generate income, minimize taxes and ensure your wealth lasts.
“I recently helped a couple create a comprehensive retirement income plan that incorporated pensions, Social Security, investment accounts and an annuity.
“Their plan generates $150,000 annually in retirement. They have the freedom to travel and pursue hobbies without worrying about money.”
He emphasized that proper planning is key to a worry-free luxurious retirement.
With discipline, time and sound financial strategies, building wealth for a luxurious retirement is possible. The key, Pace said, is saving and investing consistently, maximizing tax-advantaged accounts and developing additional income streams.
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