Why High-Net-Worth Retirees Are Turning To Tax-Focused Planning

High-net-worth (HNW) individuals, often with investable assets exceeding $1 million, face complex considerations when planning for retirement. In 2025, affluent retirees are increasingly focused on strategies that aim to preserve wealth, support their lifestyles, and create lasting legacies amidst market fluctuations and changing tax regulations. A certain type of financial professional, the tax-focused retirement advisor, is gaining prominence by offering integrated approaches to tax-efficient investing, sustainable withdrawal strategies, and estate planning.

Broker-dealers, who primarily sell investment products and earn fees, and non-fiduciary advisors (those not bound to act solely in the client's best interest) are generally prohibited from providing specific tax advice unless they hold tax credentials. In 2023, there were approximately 625,000 registered brokers in the U.S [a]., many of whom face these restrictions.  At the same time, it's estimated there were fewer than 90,000 fiduciary financial advisors who potentially offer tax planning.  An easier way to think about it, for every 10 "advisors" that retirees may be working with, only 1 of those is likely to offer tax planning. [b,c]

These key areas may assist HNW retirees in navigating their financial futures.

Tax-Efficient Investing: Aiming to Preserve Wealth

Taxes can potentially reduce portfolio returns if not carefully and proactively managed. With diverse income sources, individuals often seek ways to minimize tax liabilities while pursuing investment growth. Strategies such as Roth IRAs, municipal bonds, and tax-loss harvesting are commonly explored to potentially enhance after-tax outcomes. Other strategies involve an approach that moves assets from a taxable account type into a tax-free option.  These strategies may be initially overlooked as some taxes will be paid during the move in most cases; however, with some strategies, there may be ways to better reduce your tax bill in the long run.

"Tax-focused advisors aim to prioritize long-term tax efficiency as a core component of retirement planning," says Christopher Dixon, Co-Founder of Oxford Advisory Group. "By considering options like Roth accounts for tax-free growth or municipal bonds for tax-exempt income, advisors seek to potentially reduce tax exposure." For example, 36.1 million U.S. households utilize Roth IRAs, which may offer tax-free withdrawals after age 59½, making them a popular tool for HNW retirees [1]. One should also monitor potential tax policy changes in 2025 to help keep strategies aligned with current regulations.

Sustainable Withdrawal Strategies: Supporting Lifestyle and Longevity

It can be a tricky balance to maintain an affluent lifestyle while ensuring wealth lasts through not just retirement, but survives into an estate to pass down. Research suggests these individuals reduce spending by approximately 0.35% annually, highlighting the need for carefully designed withdrawal plans [2]. Approaches like the 4% rule or bucket strategies are often considered to balance liquidity and growth, though with factors like inflation, taxes, and recent market swings, these tactics may be outdated.

"Flexible withdrawal plans aim to adapt to market conditions and individual needs," Dixon notes. "By potentially drawing from taxable, tax-deferred, and tax-free accounts, you may be able to have more options to manage your tax rate." Such strategies may help retirees manage their income efficiently, potentially supporting both current lifestyles and long-term financial goals.

Estate and Legacy Planning: Crafting a Lasting Legacy

Estate planning is a priority for retirees who seek to transfer wealth efficiently to heirs or charitable causes. With 70% of individuals with assets over $1 million aiming to minimize estate taxes [3], strategies like trusts, life insurance, or qualified charitable distributions (QCDs) are often explored to potentially reduce tax burdens and align with personal values.

"Estate planning aims to blend tax strategy with legacy goals," says Dixon. "Tools like QCDs, which allow donations up to $108,000 annually from IRAs for those over 70½, can potentially lower taxable income while supporting philanthropy." By considering these options, tax-focused advisors aim to help clients protect assets and facilitate smooth wealth transfers, potentially preserving wealth for future generations.

The Role of Tax-Focused Retirement Advisors

Tax-focused retirement advisors aim to offer a comprehensive approach, integrating tax planning, withdrawal strategies, and estate planning to address the unique needs of retirees. As financial complexities grow in 2025, their experience seeks to provide clarity and alignment with clients' goals. For HNW individuals exploring retirement options, consulting a tax-focused advisor may offer valuable insights into tailored strategies.

References

[1] Investment Company Institute, "The Role of IRAs in U.S. Households' Savings for Retirement, 2023," ICI Research Perspective, January 2024.
[2] J.P. Morgan Asset Management, "2025 Retirement Planning Guide," J.P. Morgan, November 2024.
[3] Fidelity Investments, "2024 High-Net-Worth Retirement Study," Fidelity, October 2024.

[a]The National Association of Personal Financial Advisors, www.napfa.org.

[b] "Financial Advisor Industry Statistics to Know," SmartAsset, March 2, 2025.

[c]"How Many Financial Advisors Are in the U.S.?" Finance Strategists, March 14, 2024.

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