Maintaining an affluent lifestyle throughout retirement could become a significant challenge.

High-net-worth individuals often may have higher living expenses, including luxury homes, travel, and leisure activities.

Ensuring these lifestyle choices are sustainable for decades could require careful planning and regular adjustments to spending habits.

Longevity risk is the possibility of outliving your financial resources.

According to the Social Security Administration, a 65-year-old man today can expect to live to about 84, while a woman can expect to live to 86.5, with one in four 65-year-olds living past 90.³

This increased life expectancy means even substantial wealth could potentially be stretched thin over a lengthy retirement, reducing the amount that could be passed on, if any assets remain.

Economic downturns may disproportionately impact larger portfolios. While high-net-worth individuals may have diversified investments, market volatility could still pose a potential threat.

Sudden declines in the stock market or real estate values could potentially erase wealth quickly, making it important to consider developing a robust risk management strategy. 

The 2008 financial crisis and 2020 COVID-19 pandemic demonstrated how suddenly well-planned investment performance can be impacted with no guarantee of certain recovery.

High-net-worth individuals may often face complex tax situations, including higher income taxes, estate taxes and capital gains taxes. Staying ahead of tax law changes and employing strategic tax planning could potentially help preserve wealth and mitigate loss.

Implementing strategies such as tax-loss harvesting or utilizing trusts could potentially help reduce taxable income and preserve wealth. The current federal estate tax exemption is $13.61 million per individual, but future changes could lower this threshold, which may increase tax liabilities for high-net-worth estates.⁴

Fidelity Investments estimates that a 65-year-old couple retiring today could need $315,000 to cover healthcare costs in retirement.⁵

Long-term care, specialized treatments, and rising medical expenses may quickly deplete savings, even with comprehensive insurance. Proactively planning for these potential costs could be important to help ensure healthcare needs do not compromise financial stability.

Inflation could also potentially impact high-cost lifestyles in retirement. The cost of goods and services tend to rise over time, eroding purchasing power.

It can be important for high-net-worth individuals to consider inflation in their financial planning to help ensure their wealth potentially retains its value and could support their lifestyle in the future.

The Federal Reserve aims for a long-term inflation rate of around 2%, but recent years have seen inflation rates exceeding this target, further impacting purchasing power.⁶

Changes in laws could potentially have significant implications for retirement planning and wealth preservation.

It can be important for high-net-worth individuals to stay informed about retirement account rules, estate laws, and other regulations and adjust their strategies to comply with new regulations and optimize their financial position.