Nearly half (48%) of US high net worth investors said achieving lifestyle goals in retirement is their most important financial target, according to a survey.
BMO Wealth Management US surveyed more than 1,000 US HNW investors for a report, A Sudden Windfall: A Blessing, Not a Burden, which highlights the objectives and the psychological effects tied to receiving a significant amount of money and/or assets.
The report found that increasing wealth (44 %) and protecting current wealth (42%) made up the top three for most important financial goals, where respondents could choose more than one answer.
Sudden windfall
Also, the primary goal for respondents if they were to receive a sudden financial windfall was sharing with family, friends and charity (53%).
This was followed closely by paying off debts (51%) and investing in the stock market, a business or property (49%).
The main estate and legacy concerns tied to a sudden increase in wealth were helping others (29%), how to create a legacy with the money (16%) and how to avoid family conflict over money (15%).
Just over one-in-three respondents (36%) cited the importance of seeking advice to invest wisely in their investments and retirement plans in the event of a sudden windfall.
Tania Slade, national head of wealth planning at BMO Wealth Management US, said: “Receiving an unexpected amount of money or assets can bring feelings of relief, joy and responsibility, so it’s critical to take time to consider all the options.
“Engaging a team of experts to discuss options and provide insight on decisions, outline the impact on lifestyle cash flow requirements and estate planning goals and, most importantly, advise on growing and preserving that new wealth will set the scene for a successful financial future.”
Tips
BMO Wealth Management has offered the following tips to help manage a sudden windfall:
1. Seek experts: Find the appropriate team (financial planner, tax adviser, estate planning attorney) who will help you better understand your newfound wealth and how to manage it.
2. Find a place for the money: A financial planner will assess your individual situation and make recommendations based on your needs and future financial goals.
3. Make plans: Talk with your family and communicate the intentions outlined in your wealth plan. Establishing a wealth plan will help you reach your financial goals by guiding you throughout the process with specific tips.
4. Understand tax implications: Knowing the ins and outs of tax filing will help alleviate stress and clarify questions around taxable income and potential reductions.
5. Establish your legacy: Determine what contribution you would like to make to your family and community, and communicate these desires to your family, especially if you want them to continue your legacy.
