The Three Strategies Millionaire Retirees Should Do Now

December 20, 2023 | Wealth Management

By Mike Doyle, CFP®

Millionaire investors embarking on or in retirement are different from investors with lesser means. If you are a high-net-worth (i.e., millionaire) investor with at least $1 million in investable assets, not including the value of your home or other property, congratulations. You have bought yourself issues specific to high-net-worth investors.

How do you ensure that the money you’ve built over a lifetime will provide for a bright and lasting retirement and create the enjoyment you desire?

Our investment counsel for high-net-worth investors is deliberately different. We suggest these three strategies:

1. Develop A Written Plan: the Investment Policy Statement

Do you have a written roadmap detailing your long-term financial plan and goals? Many millionaires don’t. Nor do many investors with less assets. Perhaps you’ve spent a lifetime growing your business or career but have spent little time thinking about how to grow and protect your money in retirement.

This written plan, which we call an Investment Policy Statement (IPS), is a written document that states your long-term investment goal. Your IPS is the financial roadmap for life. A well-defined strategy and plan will help you stay focused on your investment goals and make it less likely to get swayed by market fluctuations and short-term market fads.

Your IPS should include a statement of purpose and outline your investment objectives, personality, time horizon, liquidity, tax and legal concerns, and unique circumstances. The IPS should also delineate your preferred asset allocations, the potential range of targeted returns, and how to compare and evaluate your result with your goals.

Your Investment Policy Statement (IPS) is your road map for your portfolio for the next 10-30 years.

2. Allocate More to Equities for Long-Term Growth

Depending on your circumstance, we often counsel investors to hold much of your portfolio in equities. The reasons revolve around the idea that you’ll need more money in retirement than you think.

Stocks have a strong likelihood of growing over time

Many financial advisors suggest that retirees with substantial assets increase their portfolio allocation to fixed-income investments to create monthly income. We don’t.

Millionaires need to have a higher, not lower, allocation to equities—to grow wealth and to protect against inflation for the long term. We don’t want you to have to drastically cut back your lifestyle in retirement. Rather, we suggest ways to make assets grow.

A conventional allocation for high-net-worth investors might be 50% in bonds, 40% in stocks, and 10% in cash. Millionaires have earned the right to have a higher percentage of equities in their portfolio than investors of lesser means. Depending on your objectives and situation, we may suggest allocating 70% stocks, 20% bonds, and 10% cash. In the long run, meaning ten years or more, the chances of making money in the stock market have been quite favorable:

wdt_ID 96.5% 10% <2%
1 During all 10-year periods over the last 100 years, equities have increased 96.5% of the time. The ten-year average annual equity return for the last 66 years was an even 10%. Stocks had a negative return in only one of 66 ten-year periods, after the boom.

Source: PSN

Millionaires have earned the right to have a higher percentage of equities in their portfolio than investors of lesser means.

You may live longer than you think

Many millionaires may think they will only live for a while after retirement. But you’ll happily and likely live longer, and you may need more money than you think, which is why your assets must grow. Historically, it’s more than reasonable to consider investing a higher allocation in equities if your investment time frame extends beyond 20 years. You may live 20-30 years or more after retirement. Some of our clients have been retired for more than 30 years.

Actuary tables say that an average 50-year-old man may live to age 80 or longer. The life expectancy for a 50-year-old woman is 83. Relatively young retirees do indeed have to plan for funding a long second act.

Moreover, the longer you are around, the greater the likelihood of living through stock market declines. Will your portfolio allocation be properly positioned to mitigate potential losses during the next market decline? Market volatility should not lead you to change your asset mix. And stocks provide the best long-term opportunities.

Inflation will limit your purchasing power

Inflation will devalue your retirement assets over the long term. Even with a 2% annual inflation rate, $1 million in today’s money will only be worth $672,971 in 20 years. This table shows how inflation decreases the purchasing power of $1 million over 10, 20, and 30 years with 2%, 4%, and 6% inflation.

Purchase power of $1 million would decline to:

wdt_ID Annual Inflation 10 Years 20 Years 30 Years
1 2% $828,348 $672,971 $552,071
2 4% $675,564 $456,387 $308,419
3 6% $558,395 $311,805 $174,110

This hypothetical example does not reflect the actual performance of an investment. Assumes all earnings are reinvested and excludes taxes and fees. Source: BankRate Monitor.

3. Create A Two-Year Cash Cushion

Are you prepared for difficulties in addition to bear markets, such as family health matters or educational needs that may require you to use your savings? The answer should be yes, you should be prepared; you need a cash reserve. This rule applies whether you have a million or more in investable assets or have a reasonable expectation of doing so in the future.

A bear market is when the stock market declines 20% or more. The average length of a down market has been 289 days, or about 9.6 months, and has occurred on average every 3.5 years.

As a buffer against contingencies, including volatile markets, we recommend eliminating all debt—and have at least two years of your annual spending in bank checking or saving accounts. Liquid assets, by definition, exclude your home, other property, business assets, and retirement funds.

Many financial advisors do not highlight the need for a deep reservoir of cash reserves for up to two years. We’ve met with many couples who said we were the first wealth manager to tell them this.

As a buffer against contingencies, including volatile markets, we recommend eliminating all debt—and have at least two years of your annual spending in bank checking or saving accounts.


High-net-worth investors are different than many other investors. Your long-term investment strategy should include developing, monitoring, and adhering to a written Investment Policy Statement that serves as your financial planning roadmap. You should also allocate a generous portion of your portfolio to equities for ongoing growth and lasting income. You need to keep a deep cash cushion.

With these three strategies in place, you should, of course, continue your pursuit of life to the fullest.

About Mike Doyle

Mike Doyle, CFP® is the Vice President of Aurora Investment Counsel, a post he has held since 2005. Mike is responsible for client relationships and sales. Before joining Aurora, Mr. Doyle serviced high-net-worth and financial intermediary clients as a portfolio manager at Vestor Capital Corporation in Chicago. Mike holds the Certified Financial Planner® designation of the Certified Financial Planner Board of Standards, Inc. He earned a B.S. in marketing from the University of Georgia.

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