If your retirement portfolio exceeds $2.5 million, you’re among the top 8% of American households, according to the latest Survey of Consumer Finances.
You’re also well above the “magic” retirement savings target of $1.26 million for most Americans, as estimated by Northwestern Mutual.
In other words, you’re in a strong position to enjoy a financially secure retirement. At this stage, your primary concern isn’t making money but preserving it. With that in mind, here are seven key strategies to help protect and solidify your financial future.
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1. Reassess your asset allocation
Risk-taking is an essential ingredient for building wealth — but once you’ve accumulated enough, preserving it becomes the priority. At this stage, it makes sense to shift to a more conservative, well-diversified asset mix.
According to the Goldman Sachs Family Office Investment Insights report, the average ultra-wealthy family allocates roughly 28% in public equity, 26% in private equity, 12% in cash, 10% in fixed income, 9% in private real estate, and 6% in hedge funds.
You don’t need to replicate this exact breakdown, but adopting a similarly diversified approach can help protect your portfolio and sustain long-term wealth.
2. Minimize leverage
Leverage may have played a role in your success — but once you’ve reached multi-millionaire status, you likely don’t need to rely on it as much.
If you’ve reached your personal wealth milestone, consider reducing or eliminating debt, including your mortgage, business loans, or any margin loans tied to your investment portfolio. Lowering leverage reduces risk and adds financial stability.
3. Build a robust tax strategy
In a 2024 survey by Northwestern Mutual, high-net-worth Americans ranked taxes as a greater concern than outliving their retirement savings.
This shouldn’t come as a surprise. The U.S. tax system is both complex and progressive, which means tax burdens increase significantly as income and wealth rise. Once you cross certain thresholds, effective tax planning becomes essential to preserving your wealth.
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
4. Guard against inflation
Inflation is a silent, but persistent, drain on wealth. While it impacts low-income households hardest, according to the Federal Reserve of Dallas, it’s also a major concern for retirees and anyone living on a fixed income.
For example, at a 3% annual inflation rate, your cost of living would rise by 51% over 14 years. Even a few years of elevated inflation — as we experienced from 2021 to 2023 — can significantly derail retirement plans.
To hedge against inflation, experts cited by CNBC recommend adding exposure to assets such as gold, real estate, infrastructure, or Treasury Inflation-Protected Securities (TIPS).
5. Create passive streams of income
You don’t have to retire with $2.5 million, but you no longer need to rely on earned income, either.
Allocating capital to passive income streams — such as dividend stocks, rental real estate, private credit, farmland, or intellectual property — can provide the cash flow needed to leave your job and pursue what matters to you.
Multiple streams of passive income should also help you preserve and expand your portfolio over time.
6. Hire a professional
As your finances grow, so does the complexity of managing them. So it’s no surprise that millionaires are nearly twice as likely as the general population to hire professional financial advisors, according to Northwestern Mutual.
In fact, about 69% of millionaires surveyed said they use a professional advisor. If you’re a multimillionaire, hiring an expert could be a great way to safeguard your wealth and optimize your long-term strategy.
7. Prioritize your health
Why risk stress-related health issues when you have the financial freedom to prioritize your well-being?
Taking more time off and prioritizing your health can reduce the risk of chronic illness, lower future medical costs, and extend your Healthy-Adjusted Life Expectancy or (HALE).
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This article originally appeared on Moneywise.com under the title: Here are 7 top ‘stay rich’ tips for once your portfolio hits $2.5M — and how to catch up if you’re way behind
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.