Many older Americans are millionaires. In fact, the average household net worth among 65- to 74-year-olds is $1.79 million, according to Fidelity.
Some people have far more than that in retirement, which provides them with the financial security that people dream of enjoying during their later years in life. Of course, you still need to be cautious about how much money you withdraw each year so you don’t drain your accounts dry.
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But If you want the best chance at a retirement free of financial worries, it may be helpful to adopt some of the habits of the richest retirees.
Experts, including those who work with wealthy clients, spoke to Moneywise about some behaviors that can potentially help you achieve the financial security you truly deserve.
1. Create an income floor
It probably goes without saying, but wealthy people tend to have plenty of income coming in from stable, reliable sources.
“Successful people understand the importance of having a consistent, contractual income floor in place,” Stan Haithcock, also known as Stan The Annuity Man, told Moneywise. This is money that’s consistently deposited into your bank account.
Haithcock listed several different sources of reliable income that could make up your floor, including Social Security, dividend stocks, annuities that guarantee lifetime income, Treasuries, CDs, and high-yield money market accounts.
It’s worth exploring these options because having this baseline income “ensures consistent liquidity,” which means you always have accessible cash coming in. Haithcock said it can also make you a better investor because you can invest your money, leave it alone, and avoid selling at an inopportune time since you have other funds coming in.
2. Invest in a mix of different assets
Wealthy people also favor another habit you can easily adopt. They don’t put all their eggs in one basket.
“Successful retirees generally aren’t betting their entire future on one stock, one business or one asset class,” Cristian Mundy, a CFP and senior wealth manager at LifeLine Financial & Wealth Management, told Moneywise. “They build multiple sources of retirement income and maintain enough liquidity so they’re not forced to sell investments at the wrong time.”
Dr. Jeffrey Goodrich, founder of JCG Private Wealth Management and professor at UCLA, also said that these assets tend to include things most people don’t think about buying, like cash value life insurance and income properties.
And they may “take advantage of retirement vehicles like deferred compensation, phantom stock options, and stock appreciation rights. And when interest rates are low, they take advantage of arbitrage opportunities,” Goodrich said.
Not everyone can get stock options, but you can ensure you have exposure to different asset classes so that when one performs poorly, others can hopefully offset your losses.
A generous nest egg is just one side of the coin. If you want financial security, you also need to watch where your money is going.
“An important habit that wealthy retirees have is having realistic spending goals,” Andrew Matz, a financial planner at Oak Road Wealth Management, said. “They understand the safe amounts they can withdraw from their retirement accounts so they won’t have to adjust their lifestyle in the future. That is one of the best ways to make your retirement secure.”
With around 46% of retirees indicating that their spending is a source of anxiety that takes an emotional toll, adopting this habit could improve your finances and peace of mind. You can do this by creating and sticking to a realistic budget that ensures you don’t withdraw more than a safe amount from your retirement accounts.
4. Invest in asset protection
You don’t want to work hard to save for retirement, then lose it all because something goes wrong. Rich retirees don’t have to worry as much about that, because they’ve taken steps to protect their wealth.
“The rich don’t just save for retirement,” Blake Harris, an asset protection attorney and founding principal of Blake Harris Law, said. “They make sure a lawsuit won’t undo their efforts.”
Harris said that wealthy people hold assets strategically, including putting money into ERISA-qualified retirement plans, taking advantage of homestead exemptions or, “for those more significant assets, going a step further to move part of their wealth into a trust structure outside the U.S., since a domestic trust only binds courts in the state that created it.”
This isn’t only an issue for those with tens of millions, either. Everyday Americans could find themselves in need of asset protection if they’re sued for a car accident or need expensive long-term care.
5. Think long-term
Finally, wealthy retirees don’t just make decisions that feel good today. They always stay focused on the big picture, including preserving their wealth over the long term.
This means making spending, saving, and investing decisions that will set you up for a more secure tomorrow, even if those decisions require some short-term sacrifice.
“Most importantly, they play the long game,” said Mundy, of LifeLine Financial. “As someone who coaches youth sports, I use this analogy often: You don’t win a championship because of one great practice. It’s habits you repeat that ultimately show up on game day.”
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