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Creating a Balanced Retirement Income Plan
Explore strategies for building a retirement income plan—covering taxes, timing, liquidity, and legacy—designed for high-net-worth households.
Learn how high-net-worth individuals can approach retirement planning through tax-efficient withdrawals, income diversification, estate tools, and coordinated strategies.
How High-Net-Worth Individuals Can Create an Effective Retirement Plan
High-net-worth individuals often face retirement planning decisions that involve complex assets, cross-disciplinary tax issues, and long-term family considerations. Real estate, business interests, and concentrated equity can all introduce challenges that standard retirement models don’t address.
To meet these complexities, a successful retirement planning approach may include strategies such as:
- Mapping assets, liabilities, and future cash flow
- Using a mix of tax-deferred, tax-free, and taxable accounts
- Sequencing withdrawals to manage taxes and Medicare surcharges
- Diversifying income across public and private assets
- Addressing long-term care and liability exposure
- Adjusting for estate and philanthropic goals
- Maintaining liquidity and behavioral discipline
- Revisiting plans as tax law and policy evolve
Each of these strategies plays a role in helping affluent individuals navigate the unique demands that come with managing wealth over a long time horizon.
1. Start With a Holistic Balance Sheet & Cash-Flow Map
High-net-worth households often hold a mix of assets beyond traditional retirement accounts, such as concentrated equity positions, real estate, private business interests, and alternative funds. These assets can offer growth and diversification, but they also introduce illiquidity, valuation complexity, and tax timing challenges.
The first step in any advanced retirement strategy is to build a complete net-worth statement and a long-range cash-flow projection. This goes well beyond a standard retirement calculator. It should factor in capital gains exposure, distribution rules, business transition timing, required minimum distributions (RMDs), and anticipated expenses over 20+ years.
Mapping this out helps surface risks that may not be immediately obvious, such as:
- The impact of a down market early in retirement (sequence-of-return risk)
- Future “tax cliffs” from delayed RMDs or asset sales
- Whether current liquidity levels can support planned lifestyle spending
2. Choose the Right Tax “Containers”
Account Location & Funding Strategy
High-income investors often reach the contribution limits of traditional tax-deferred accounts, which makes strategic use of account types especially important. Leveraging every available tax structure—including Roth options, taxable brokerage accounts, and specialized insurance wrappers—can increase flexibility and support efficient withdrawals later.
- Roth Contributions and Conversions: For those above income limits, back-door or mega-back-door Roth contributions (via 401(k) plans with after-tax features) may be available. SECURE 2.0 legislation also enables higher-income earners to make Roth catch-up contributions, creating more opportunities for tax-free growth.
- Taxable Brokerage Accounts: These accounts offer flexibility for income management and strategic giving. Investors may harvest losses to offset gains or donate highly appreciated securities to charitable vehicles, potentially reducing capital gains exposure.
- Private Placement Life Insurance (PPLI): For qualified investors, PPLI allows certain alternative assets to grow inside a tax-deferred structure. These policies can also serve estate planning functions, such as transferring wealth or creating liquidity.
Multi-Year Roth Conversions & Bracket Management
Strategic conversions from traditional IRAs to Roth accounts, especially during lower-income “gap years” after leaving the workforce but before RMDs begin, can help reduce future tax exposure. By spreading conversions across multiple years and managing marginal tax brackets, investors can shift assets into Roth accounts without triggering large one-time tax bills.
This also helps reduce the size of future RMDs, potentially lowering Medicare IRMAA surcharges and preserving Roth assets for longer-term or legacy use.
3. Strategic Withdrawal Planning
The order in which you withdraw from different account types can significantly influence long-term tax exposure. A commonly used strategy is to draw first from taxable accounts, then from tax-deferred accounts, and finally from Roth accounts. This sequence allows tax-advantaged assets to keep growing while managing annual income.
In some situations, a blended approach that draws proportionally from multiple account types may offer better tax efficiency, especially when aligned with marginal tax brackets and Medicare thresholds.
The recent SECURE 2.0 changes have extended RMD start ages to 73 or 75, depending on birth year. This creates a larger window to conduct Roth conversions and manage tax exposure before withdrawals become mandatory. Structured withdrawal strategies can also help minimize IRMAA surcharges, which are triggered when income exceeds certain Medicare thresholds.
A coordinated plan can help avoid unnecessarily depleting low-tax assets too early or triggering avoidable tax brackets late in retirement.
4. Build Durable Income Streams & Diversify Risk
While traditional portfolios of global equities and high-quality bonds form a strong foundation for income consistency, some high-net-worth investors add asset classes to improve diversification and cash flow.
- Private Credit & Real Assets: These may include interval funds, private real estate, infrastructure, or other income-oriented alternatives. While they come with different liquidity profiles and risk factors, they can reduce reliance on public markets and provide steady cash flows.
- Longevity Hedges: Deferred income annuities or Qualified Longevity Annuity Contracts (QLACs) purchased within retirement accounts may offer a way to support baseline income needs later in life while reducing required minimum distribution calculations in earlier years.
Diversifying income sources may also allow for greater withdrawal flexibility and potentially reduce the need to liquidate growth-oriented investments during downturns.
5. Plan for Long-Term Care and Liability Exposure
Long-Term Care
While high-net-worth families often have the resources to self-fund care, doing so can create tension between health needs and legacy planning goals. Long-term care costs can exceed $150,000 annually, depending on the type and location of care.
Hybrid LTC insurance or asset-based solutions offer one way to shift this risk off personal balance sheets. These policies can preserve liquidity and reduce the chance of having to sell portfolio assets under unfavorable market conditions.
Personal Liability
Affluent households are more visible targets for litigation. Reviewing umbrella coverage limits, asset titling, and legal structures is a critical part of risk management. Coordinating this with estate and business planning can help minimize or possibly avoid unnecessary exposure or fragmented coverage.
6. Design Plans with Transfer in Mind
Retirement planning for high-net-worth individuals often overlaps with estate planning. It's not just about income; it's also about long-term asset transfer, tax impact, and family governance.
Tools that may support tax-efficient asset transfer and long-term planning include:
- Irrevocable Life Insurance Trusts (ILITs): Can remove life insurance proceeds from the taxable estate and provide liquidity for heirs.
- Grantor Retained Annuity Trusts (GRATs): Allow the transfer of appreciating assets with reduced gift tax exposure.
- Charitable Remainder Trusts (CRTs): Provide income to beneficiaries for a period of time, with remaining assets going to charity.
- Purpose-Driven Trusts: Embed family values, governance structures, or philanthropic intent into the estate plan.
These strategies may help address estate tax liquidity needs while supporting wealth transfer goals across generations.
As RMD rules continue to evolve, coordinating beneficiary designations and account titling with current laws—such as the 10-year distribution window for inherited IRAs—is increasingly important to avoid triggering accelerated taxation.
7. Layer In Purposeful Giving
Philanthropy can be an effective part of a high-net-worth (HNW) retirement plan. Vehicles like Donor-Advised Funds (DAFs), Charitable Remainder Trusts, and Qualified Charitable Distributions (QCDs) allow for flexible giving strategies that align with tax and estate goals.
For example:
- Donor-Advised Funds offer immediate tax deductions while allowing gifts to be distributed over time.
- Charitable Remainder Trusts can generate income for the donor or heirs while ultimately benefiting a cause.
- Qualified Charitable Distributions allow direct IRA distributions to qualified charities starting at age 70½, which may count toward RMDs and reduce taxable income.
Some families also use DAFs to give anonymously or to time gifts in a way that complements income planning.
8. Preserve Liquidity & Behavioral Discipline
Large portfolios can still be vulnerable to emotional decision-making, especially during market volatility or major life transitions. Holding 12 to 24 months of planned outflows in high-yield savings, money markets, or short-term Treasuries can reduce pressure to sell growth assets in a downturn.
Written investment policy statements, pre-set rebalancing thresholds, and advisor-led reviews can also help mitigate common behavioral biases like loss aversion, overconfidence, or herding.
These tools act as a safeguard against reactive decisions that might undermine long-term plans.
9. Monitor Policy and Reassess Regularly
Tax rules, estate laws, and contribution limits change regularly. For high-net-worth individuals, even minor adjustments in policy can shift the value or applicability of certain strategies.
Examples include:
- Phase-in provisions of SECURE 2.0 related to RMDs and Roth accounts
- Changes in capital gains treatment or income thresholds
Plans should be reviewed every 12 to 18 months not just for performance, but to reassess assumptions, reprice insurance coverage, and refine charitable or estate planning components.
10. Assemble Your Wealth Management “C-Suite”
A strong plan often depends on the collaboration of multiple professionals, not just a single advisor. Consider bringing together a:
- CPA for tax planning and filing
- CFP® (Certified Financial Planner) or advisor for investment and retirement strategy
- Estate planning attorney for legal structures and beneficiary design
- Philanthropy or governance consultant for legacy planning
Coordinated review and communication across these roles help ensure that recommendations don’t conflict, and that financial, legal, and personal goals stay aligned over time.
Bringing the Pieces Together
A high-net-worth retirement plan should evolve with your goals, your family, and the broader policy environment. By aligning tax structures, withdrawal strategies, estate and charitable planning, and behavioral guardrails, you can convert financial complexity into a long-term income strategy that reflects both your needs and values.
Contact an advisor near you to learn more about how EP Wealth can support integrated retirement planning for high-net-worth individuals.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
- Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.
