• Retirement and Annuity Advisor Jennifer Lang

Wealth Protection: What You Can Do to Preserve Your Family Assets


We all have spent most of our working lives hearing advice to save and plan for retirement. But retirement isn’t just about gathering assets for later years. It’s also about protecting them from loss.


Here are some practical wealth protection tips and strategies that you can implement to preserve your hard-earned assets.


What Is Wealth Protection?

Wealth protection in the financial industry refers to wealth management strategies and tools to help individuals, families, and businesses protect their assets. Everyone needs to put protective measures in place to deal with unexpected events, which will undoubtedly occur.


You will face various potential threats to your financial well-being throughout your life. These risks involve potential harm to your retirement plans and your estate plan. You will also want to manage your liability risk, whether professional in your career or at home in your family.


Your Retirement Plan

These recent times have shown how easily things can go astray for your retirement plan. No matter how carefully you have invested, even the most carefully planned portfolio will suffer some loss when the market has a major swing.


As we all know, markets can go down as quickly as they go up. Further, making those losses back can be harder, in many cases, than making the money in the first place.



Your Estate Plan

Similarly, it’s good to pay close attention to your estate planning.


First, of course, you should actually be planning. You will probably want to work with financial professionals to help you put together a plan to protect those you leave behind. Depending on your needs and situation, you may tap annuities to cover your spouse until retirement or life insurance to cover estate taxes and educational expenses.


You will also want to ensure that someone has access to the keys and passwords for any digital assets you may have. Those urban legends of people dying without leaving anyone the passwords to their substantial asset holdings aren’t all urban legends.


Make sure you have worked with your tax professionals on your estate issues. Marital exclusions are high but are also a target.


The gift tax is subject to change each year. If you are pushing the envelope in it, you could have problems. Also, be careful with the beneficiaries on any life insurance so that the proceeds don’t trigger state taxes.


Finally, if you have created a trust, be sure it’s kept current. You want to make sure all the named assets are correctly titled, that the taxes are figured correctly, and that your trustees and their successors are still alive.


If you had young children when you created your trust, make sure you clean up any outdated provisions to match where your kids are now.


What Are Some Wealth Protection Strategies?

You can use various strategies to protect your wealth. The first and most well-known is diversification. Your financial professional can provide recommendations of stocks, bonds, mutual funds, and other asset types, depending on your risk tolerance, personal situation, and other factors.


A general rule of thumb is that your percentage of stocks should go down as you age. But it’s good to want them in your portfolio so it can keep up with inflation.


Bonds can be laddered so that they don’t all face the same potentially badly-timed conditions. Mutual funds, especially target-date funds, might also serve some role in your diversification strategy.


Finally, suppose you are pretty well at max on your qualified retirement accounts as well as your savings and investments. In that case, you may consider alternative investments or other asset classes for some portion of your wealth. A qualified, experienced financial professional can discuss the merits and disadvantages of this with you.



Using Annuities and Other Guaranteed Solutions to Protect Wealth

An additional strategy for wealth protection is considering putting some portion of it into annuities. At their most simple, annuities are contracts for a stream of payments, returning money you put into the annuity plus some interest earnings.


However, the world of annuities has evolved as the public’s appetite for innovation has moved the needle. You can buy annuities tied to market indexes without being in and exposed to the market (sounds pretty good right now, doesn’t it).


Whether you buy fixed or fixed index annuities, you can buy riders to protect your surviving spouse and keep the income coming. Plus, so long as you are careful picking your annuity issuers, you can rely on that principal and income being guaranteed.


Of course, annuity guarantees are backed solely by the claims-paying ability of the issuer, which is why due diligence is so necessary.


Wealth Protection from Financial Risks

Annuities can also ensure that you won’t outlive your income. You can establish them with a lifetime income rider which will guarantee at least a minimum payment until your death.


Annuities can also help against costly financial disasters, such as long-term care needs or emergency health situations. There are riders that allow your annuities to step in as a replacement for long-term care insurance without having to drain your estate first.


Annuities are available for IRAs and can be in Roth or traditional account flavors. A Roth annuity held for five years allows you and your surviving spouse to access your money on a tax-free rather than tax-deferred basis.


Protection with Changing Health Situations

An annuity and a trust will be there no matter what happens to you. When you can no longer manage your assets yourself, an annuity will give you guaranteed income, while a trust with a durable power of attorney can keep making the decisions when you no longer can.


Probate Exemption

Remember that you can leave your spouse potentially a great deal of money. Take advantage of that when going things to your estate. Talk to experienced, qualified tax and estate planning counsel to explore your options for leaving as much as possible to your spouse in a tax-advantaged transfer.


Protect Your Financial Well-Being

All of these techniques – and more – can help protect your wealth as you approach the transition from accumulation to preservation and distribution. These are complex and confusing issues.


Fortunately, you don’t have to rely solely on your own judgment. Work with one of the financial professionals at JenniferLangFinancialServices.com to begin to work toward protecting your wealth today. If you are ready for personal attention, get started today.



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