Wealth management for seniors can be quite complex and requires a thorough understanding of a person’s financial situation, long-term goals, and risk tolerance. Here are some of the major strategies that wealth managers use for seniors:
Asset Allocation: This involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The process of determining which mix of assets to hold in your portfolio is a very personal one. The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.
Diversification: This is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.
Income Planning: Since many seniors are in retirement or approaching retirement, wealth managers often focus on strategies to generate a steady stream of income. This could involve investments in dividend-paying stocks, bonds, or annuities.
Tax Efficiency: Wealth managers can help seniors devise strategies to minimize the amount of taxes paid. This could involve strategic withdrawals from retirement accounts, tax-loss harvesting in taxable investment accounts, or converting traditional IRAs to Roth IRAs.
Estate Planning: With the anticipated end of the Tax Cuts and Jobs Act (TCJA) in 2025, wealth managers are increasingly working with seniors to ensure their assets are distributed according to their wishes under potentially lower lifetime exemption limits. This involves setting up trusts, implementing gifting strategies, and ensuring beneficiary designations are up to date to minimize estate taxes and protect their legacy.
Long-Term Care Planning: Given the high cost of long-term care, wealth managers often help seniors plan for these potential expenses. This might involve purchasing long-term care insurance or setting aside assets specifically for this purpose.
Risk Management: This involves identifying potential risks, both in the market and personal life (such as the need for long-term care) and creating a plan to mitigate them. This could involve diversification, insurance, or specific investment products designed to manage risk.
Retirement Planning: Even in retirement, ongoing planning is necessary to ensure that the retiree’s resources are sufficient to provide for their needs and wants for the rest of their life. This often involves monitoring spending, revisiting investment strategies, and potentially adjusting asset allocations.
Each strategy is tailored to the individual’s unique needs, goals, and circumstances. It’s important to remember that investing always involves risk, including the risk of loss, and past performance is no guarantee of future results.
