Wealth Protection

little birds escape out of birdcage

Without proper planning, a secure financial future can easily escape your grasp, leaving you vulnerable in an uncertain world. We spoke with three area experts on how to protect your wealth through all stages of life. By evaluating risks at certain points in your career, you can mitigate and protect yourself from potential loss.

When approaching financial management, so many investors approach their wealth with a growth-only strategy. They’re either acquiring it via work or other direct means, or they’re looking to expand and grow that wealth through investing. What goes overlooked, however, is protecting that wealth. We’ve spoken with three industry professionals to get their strategies on protecting your assets in a variety of forms.

Health is Wealth

Jeff Hall, with Rather & Kittrell Capital Management, says he breaks financial protection into two primary categories. You can mitigate from loss, or mitigate risk against loss. Paramount among those two strategies is health insurance, he says.

“Regardless of any age, health insurance is a must,” Hall says. “It would fall into both categories, to mitigate from loss, and mitigate against risk.”

Our bodies and minds are our primary breadwinners through our entire working lives. And if, for some reason, we cannot perform our duties to earn money then it will eat into our savings. Health insurance can protect against that, along with providing checkups along the way to signal potential health risks before they become major financial burdens. When and if medical issues occur, a slate of smart insurance policies are available. They can support individuals and families with short-term disability. Life insurance will protect a family should a breadwinner pass away suddenly. Still, other policies are designed to take care of us as we grow into old age. And at different ages through our working lives, we should consider different insurance policies.

“For anyone who is working, disability insurance is a must,” Hall says. “You want to be preventative. Disability insurance is the protection of your human capital.” Supplemental life insurance is also a smart move. And as one ages, it’s important to look at long-term care insurance policies.

Insurance for identity theft protection, for a low cost, allows people to have their credit protected and repaired in the event that a data breach leaks sensitive information, or an identity is stolen. “At any age, I think that’s a good way to mitigate risk against loss,” Hall says.

Parents can also take a few steps to protect their children while they are minors. “In January, I contacted each of the three credit bureaus, and I froze the credit for each of my children,” he says. That protects his children from being victims of identity theft or having accounts opened in their name.

“It doesn’t cost you anything,” Hall says.

Identity theft protection is reflective of a larger protection idea. Just as the world we live in today has more savvy investors, the world also has smarter criminals who want to take what we’ve earned. Identity protection keeps our financial lives in our control.

“Where I grew up, when I grew up, you didn’t lock your doors at night,” Hall says. “Now I don’t think anyone in America leaves their doors unlocked at night.”

Lifelong Protection

Throughout our lives, healthy adults take the effort to do beneficial things that will protect them from long-term issues. We exercise, drink plenty of water, lay off the sweets, and avoid that second helping. But as we grow older our needs and our capabilities change. You might be able to run three miles at both age 25 and age 65, but your pace changes. While that 25-year-old pushes the pace, and their body, the 65-year-old is happy to complete the race. Both put in the work, but how they do it changes.

Similarly, a young person, a mid-career individual, and a retiree all may have a shared goal to protect their wealth, but how they get there is different. Regardless, one piece of advice will hold true for all three stages.

“Save more, spend less, and don’t do anything stupid,” says Paul Fain, President of Asset Planning Corporation. That said, let’s take a look at strategies for various stages in our lives.

Early Career

As soon as possible, one should invest as much as they comfortably can in their employer’s 401(k) or equivalent account.

“You hopefully will be in the lowest tax bracket you’ll ever be in until you get to retirement age,” says Daniel Messing of Pugh CPAs. “With that in mind, you would look at options that invested after taxes … to put in after-tax dollars.” He suggests investing in those funds continually over your working life. “That all builds up tax-free, and comes out tax-free,” he explains.

And while you’re building that wealth, build a rainy-day fund.

“That first $1,000 or $2,000 dollars,” Fain says, “is there to save you from having to use a credit card for unexpected car repairs or some sort of health emergency.”

Save more, spend less, and don’t do anything stupid. paul fain, president of asset planning corp


Earnings usually begin to peak about 20 years into a career, according to experts. “That’s when you’re maxing out, and the kids are starting to grow up,” Messing says. “You’re paying down your debt, and you own or are close to owning your home.”

This is a time when many begin to look at diversifying their investments as a way to protect their wealth. For some, that can mean purchasing property or investing in business opportunities. Messing says that diversification can take many forms, whether it’s an aggressive stock portfolio meant to maximize return while there’s more to invest, or a diverse group of investments. Some prefer real estate. A decent financial advisor can assist with making those decisions and guiding investment pathways. An attorney or CPA can also be a good source for exploring financial options and pathways to protect wealth.

Guarding those investments for the next generation also becomes important. Trusts can be a good option for protecting wealth for children or a spouse. So too, can developing a real estate portfolio. But as parents prepare for transitioning wealth to children, they need to take a realistic look at what they want in retirement and beyond.

“Disability insurance, not just long-term, but short-term disability, is overlooked,” Fain says. “Midlife is a time to get serious about the exploration of long-term care insurance.”

Life doesn’t stop at 65. Many people are living long, healthy lives for 20 or more years after retirement. “It’s decisions you make in your 50s that will impact your life in your 70s and 80s,” Fain says. If you’re willing and able, working for a few more years doesn’t hurt either. And having some funds in more aggressive investments can help protect wealth longer.

The Golden Years

Fain calls inflation “the silent thief.” Moving into retirement doesn’t mean that investments need to instantly become conservative, such as bonds or just stable, slow-growth funds. “You still need the beneficial help of the stock market to combat the corrosive effects of inflation,” Fain says.

What he calls “sequence of return risk” can be troubling for retirees. That’s when a bear market hits as a person retires, during which stock investment can fall 20 percent. For a short period near retirement, it can be a good idea to diversify investments broadly.

“They might pull back on their exposure to the stock market, just temporarily, and circle the wagons around retirement,” Fain says. “And then reinvest. Diversifying, itself, is a wealth protection tool … you’re limiting some of the risk, and limiting some of your upside possibility.”

“The big gulp moment is when someone steps across the chasm from working and a paycheck, to nonworking and being retired,” Fain says. “A lot of people think they have to become too conservative with their investments.” He said that retirees can lessen some of their risk in wealth management by considering their social security and/or pension as a fixed asset.

And, just because you’re retired, or near retirement, doesn’t mean that you’re done learning. “Whether you work with a financial professional or not, it’s always good to continue growing and expanding your own personal financial literacy,” Fain says.

In retirement, many people find new “careers” in hobbies, volunteering, travel, or spoiling their grandchildren. Just as you explore those new areas in retirement, so should you continue to expand your knowledge in finances. Eventually, you’ll begin planning how to hand off your estate.

Speaking of children, it’s good practice to include them in financial conversations so that they can be as literate as their parents through their wealth management and protection.

“The most important financial planning conversation occurs at the dining room table: amongst family members, with spouses, with adult children, with parents,” Fain says. “You frame it: what are your life goals, what are your risks or opportunities, and what’s a candid, real assessment of your financial literacy?”   

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