5 wealth preservation best practices
For professionals, business owners, and families with growing wealth, the hardest part of financial planning isn’t choosing an investment — it’s deciding where to focus first. Individuals want to grow and preserve their wealth without relinquishing control over their assets. A diversified approach is key to wealth preservation. Use these five best practices, including prioritizing retirement, establishing an estate plan, and adopting tax savings strategies, to guide your approach.
1. Prioritize saving for retirement over education
When you have competing financial priorities like college tuition, retirement, and other long-term family needs, a financial plan isn’t an option — it’s a necessity. You need to identify your savings goals, establish your priorities, and build an investment and tax strategy to help you stay on track.
Sometimes, your savings priorities depend on the financial options that are available. Consider the common dilemma of saving for your child’s college tuition versus retirement. Most people go with “education,” and we can see why — after all, there’s less time to save. But often the correct answer is actually to prioritize saving for your retirement.
Why? Because there are alternative funding options available to fund a college education, but nothing can compensate for oversight or a shortfall in retirement savings.
2. Time in the market beats timing the market
A plan that takes a holistic view of your financial picture and long-term goals is the best approach:
- Assess your needed rate of return and risk tolerance. Will you benefit most from conserving existing wealth, or do you need to take additional risk to potentially achieve greater growth?
- Plan for a long, happy retirement. Longer lifespans mean you’re likely to have decades to enjoy the fruits of your labor.
- Adopt a long-term perspective. Rapid moves in and out of investments can be a losing proposition. Remember, that generally, time in the market beats timing the market.
3. Everyone needs an estate plan
Estate plans reflect, in writing, exactly what you want to happen with your accounts, assets, and personal items after your passing. A well-optimized estate plan should minimize taxes and support continuity. For those who have plans in place, make sure they’re up to date. Estate tax law changes over time, as do your preferences, so it’s important to make sure the language in your plan is current.
At a minimum, your plan should include:
- A will
- A revocable living trust
- A financial and medical powers of attorney
You may also want to consider a professional trustee that can take responsibility for the myriad technical details and help to preserve family harmony.
The benefits are twofold: support your loved ones who survive you as well as allow your estate to bypass the often expensive and lengthy probate process.
4. Your state’s 529 plan is often the best method to save for education
The best place to save for college is often your state’s 529 plan, which may allow for state tax deductions as well as tax-free growth. Families can apply 529 education accounts toward qualifying education purposes for tax-free treatment. It’s important to consider the amount of funding that’s truly needed to avoid incurring taxes and penalties on nonqualified withdrawals of excess contributions. However, there are several tax strategies families can apply with leftover 529 funds depending on whether your account meets certain restrictions under Secure 2.0, such as moving the funds to a Roth IRA for the beneficiary (up to $35,000 of the fund) or toward paying off student loans (up to $10,000 per borrower).
5. Your wealth preservation and tax strategy should go hand in hand
With proper financial planning, there are several key steps you can take to reduce your tax burden. It’s important to pay close attention to your tax situation, and to be as efficient as you can. You want to understand potential deductions, review your tax-deferred and tax-exempt savings options, be cognizant of capital gains (especially short-term), and employ strategies such as tax loss harvesting. Look to have your financial advisor work in partnership with your tax preparer to help you implement these strategies and plan for the upcoming tax year.
If you have further questions about these topics or anything else related to your financial plan, feel free to contact us anytime. We’re happy to help.
The bottom line
- A holistic financial plan can help you preserve your wealth even with competing priorities. A comprehensive plan brings clarity to competing priorities, such as balancing retirement and education savings, by sequencing goals intentionally. Prioritizing retirement protects long‑term independence while still allowing flexibility to fund education through tax‑advantaged tools.
- A long‑term investment approach is key. Preserving wealth requires aligning risk with your goals and avoiding reactive investment decisions. Over time, staying invested generally outperforms trying to time the market.
- Optimize your estate plan to ensure continuity, control, and tax efficiency. An up‑to‑date estate plan — including wills, trusts, and powers of attorney — helps ensure assets are transferred according to your wishes. Trust structures can also preserve control while protecting beneficiaries and family harmony.
- Maximize your state’s 529 plan with a calibrated approach. A state 529 plan is a powerful, tax‑advantaged way to save for education, but contributions should be carefully calibrated to reflect accurate funding needs and to preserve flexibility while avoiding taxes or penalties on excess, nonqualified withdrawals.
- Coordinate tax strategy with wealth preservation. Tools such as tax‑deferred accounts and tax‑loss harvesting can play a critical role in protecting your wealth without sacrificing flexibility.
